Not surprisingly, the challenges of late payment are no easier now than they were 10 years ago when this article was first published. The FSB are still working to support small businesses struggling with big companies who treat them like banks. What are your top tips for getting paid on time?

OOOH, didn’t you just love the naming and shaming of the big bad plcs who take ages to pay and risk the financial future of small businesses? I ploughed through the league table of 4000 UK companies searching for the names of the tight-fisted swines that caused me so much grief in my previous business. I didn’t find them. So I’ve emailed their details, just in case they had been missed out by accident.

Apparently the average time it takes a plc to pay its suppliers is 46 days, a figure which hasn’t changed, despite efforts on the part of the Federation of Small Businesses to draw attention to the fact that the late payment legislation – introduced three years ago – just isn’t working.

Everyone knows that cash is king in business, and managing your cash flow is one of the most challenging aspects of running and growing a business, regardless of what your business actually does.

But I have to say that it wasn’t the major plcs who were tardy payers as far as we were concerned. It was smaller businesses, themselves struggling to be paid, that found it difficult to meet our tight payment terms and faced the wrath of our scary credit control girls. Heaven help anyone who didn’t pay up by “that time of the month”!

Late payment of debt is a huge issue and, according to our enterprise minister, up to 1000 businesses in Scotland fail every year as a direct consequence of late payment. So it’s Wendy to the rescue, she has decided to take on the late paying behemoths and do something about it.

Previously, legislation allowed for interest to be added to late invoices, but to implement that the company would have to go to court – a lengthy and expensive process. Ms Alexander has this week revealed details of consultation on a European Directive that, among other things, states that a firm should be able to claim reasonable compensation from late payers for the costs of pursuing overdue bills.  At last.

I visited the web site that offers advice on collecting your cash – – and had a little giggle to myself. Some of the advice is sound: state payment terms during sales negotiation and ask “any problem paying by then?”; state payment terms boldly on quotation.

Some elements were basic common sense: a sale is not real until it is paid for; or the section that advises “some customers pay on time, most have to be reminded, some have to be threatened”.  Like we haven’t experienced that already?

But the bit that really got me going was the page headed up “Get your attitude right”. So that’s where small businesses are going wrong, it’s their bad attitude that causes big companies not to pay them. Oh really?

Anyway, the closing date for the consultation on the European Directive is 5 October 2001. Legislation will probably take some time after that to be implemented. So in the meantime, why not learn how to collect your cash the Michelle Rodger way:

Putting the squeeze on late payers is a rotten job. But somebody has to do it. The key advice is simple: don’t work for them again. The risk to your business is too significant to pussyfoot around offering chance after chance.

Late payers are like naughty children: they will push you to the limit at every opportunity, then sit back and rub their hands with glee when you give them yet another final warning. Words are not enough, especially when they know that your threats are as empty as Santa’s sack on Boxing Day. Get tough. Treat them like children. I’m not suggesting for one minute you spank them for each day past the due date, but apply the same psychology as you would to educating a child and ultimately teaching them a lesson.

The best ploy with a child is to withdraw something that matters to them: take away a Game Boy or deny access to Playhouse Disney on telly and you’ve suddenly got their undivided attention. Do the same with your late paying customer. Withdraw your product or service from them and don’t give it back until they pay – and they promise never to do it again!