Online Accountants Offer Advice to SMEs Attempting to Avoid Late Payment Culture

Late payment tips from online accountants

In conjunction with a new EU directive aiming to avoid payment mishaps and deal with the effects of late payments for SMEs, one of the UK’s leading online accountants is urging all business owners to take a stand against the ‘late payment culture’ which has swept the nation and threatened hundreds of businesses. Magic Accounts are a team of expert online accountants who have seen first-hand the damage that late payments from clients can cause for small businesses attempting to remain solvent, and they are now offering their professional advice for anyone trying to prevent late payments from ruining their business’ finances.

Laurence Collins, Managing Director of Magic Accounts, says, “The new EU Late Payment Directive is aiming to offer protection for small businesses from the plague of late payment which has swept the country in the wake of the recession, and to advise those who have already been affected. Our professional advice to these people, in conjunction with the helpful information from the EU, is to employ a part-time online accountant who will take care of the finances of a business on an ad hoc basis and will offer impartial and invaluable advice to ensure that businesses do not fall prey to late payments from clients or customers.”

Put simply, the Late Payment Directive is a law obliges public authorities to pay for goods and services within 30 calendar days (or 60 days in exceptional circumstances). Businesses should then pay their invoices within 60 days unless this is expressly agreed between the two parties as part of a contractual agreement. In the event of a payment date being missed, daily interest should then be added to the amount owed until payment is received.  The penalties for late payment are varying depending on the size of the payment, but are enough to deter late payment and protect the small business owner in the long term.

As a team of fully trained and qualified accountants, Magic are well versed in the world of financial legislation, and as such they have been able to decipher the Late Payment Directive, simplify it and relay the advice contained within the documentation to their customers, as well as impart advice of their own based not only on the government legislation but also on their own experience as accountants.

Obviously it is within everyone’s interest for late payment to be completely avoided in the first place, negating the need for the laws set out in the Late Payment Directive to even be enforced at all. Clear communication between businesses and clients is key. Payment terms should be set out clearly at the very beginning of the contract or agreement, and if it is looking like a payment may be late, a customer should always make the supplier aware of this well in advance; it may be that a compromise can be reached ahead of the payment deadline. The online accountants at Magic are able to provide in-depth advice to SME’s, guiding them on best practice when it comes to preparing for and avoiding late payments, and ensuring their business continues to run smoothly at all times.