Credit control is crucial for a business’s survival, and is your Employer’s Liability Insurance up to date?
Whilst it may seem time consuming and potentially embarrassing, chasing late payments and keeping on top of cash flow is vital for the success of a business. We run through the reasons why you really need to make sure your records are up to date and under control. Plus, when did you last check the expiry date of your Employer’s Liability Insurance policy? This isn’t an added luxury – it’s a compulsory requirement and you could be fined by the HSE if yours isn’t valid.
Credit control: The quiet discipline that keeps a business alive
Running a business in recent times has been a lesson in resilience. Costs continue to increase and customers are cautious. Cash is proving tight for many businesses and credit control is a core discipline for keeping a business afloat in such times.
When businesses get into financial trouble, it is often because they have run out of cash and not because they are unprofitable on paper. Credit control sits right at the centre of solving that problem.
When sales are made on credit, cash can often arrive weeks or even months later than expected. VAT, PAYE and suppliers, on the other hand, still need paying on time. A single large customer who pays 30 days late can be enough to put a major strain on a small business.
Effective credit control can help to turn sales into cash in a more predictable way. So, what is involved in credit control?
Agree payment terms and issue invoices promptly
Good credit control begins before the invoice is raised. Having clear payment terms that are agreed with the customer before work starts helps set expectations on both sides.
Try to avoid any delays in sending invoices out. For instance, if invoices are due when work reaches a certain stage, ensure that you are keeping track of the work done and send the invoice as soon as the trigger point is passed. The earlier you can send an invoice, the earlier you stand to receive payment.
Enforce your payment terms
Having agreed your payment terms, you then need to enforce them. If customers are routinely allowed to drift beyond your stated terms, you are telling them that your deadlines are flexible.
For instance, if you include a 14-day term on your invoice but only start chasing at 45 days, you may find that most customers do not pay until around the six-week mark. On the other hand, if you follow up politely the day after the 14 days have passed, the difference in cash flow can be dramatic.
It can feel awkward to chase payment, and you may be concerned it will damage your relationship with your customer. However, most well-run businesses expect to be chased if they miss a due date. Clear communication and timely reminders show that you run an organised business.
Keeping your tone consistent and professional helps normalise the process and makes it clear that payment is simply part of how you do business, not a personal criticism of the customer.
Spot problems early
Good credit control can help you spot problems early. When a reliable customer starts to delay payment, that’s usually because something has changed. Sometimes it is simply an administrative adjustment, but it can also be the first sign that they are experiencing some financial difficulty.
If you catch that early, you may have some options. For instance, you may be able to tighten credit terms, request payment upfront, or pause work before you are out of pocket.
You may be surprised at how helpful it can be to regularly review your aged-debtor report.
Make it a routine part of your business
On that subject, the most effective credit control systems are regular and documented. Make credit control a regular part of the week, rather than something only considered once non-payment has become a problem.
A weekly review of outstanding invoices and use of standard reminder emails takes the emotion out of things. Your accounting software may be able to automate some parts of the process for you.
Conclusion
Businesses that take credit control seriously are less likely to face sudden cash crises.
It is not about mistrusting customers, but rather helping ensure that the value you create for your customers is turned into cash in a timely and reliable way. Credit control can be the difference between growth and constant firefighting.
If you would like help reviewing your current credit control processes and understand what your debtor figures are telling you, or putting something more robust in place, please get in touch. We would be happy to help you!
Fined for failing to take out employers’ liability insurance
A visit from the Health and Safety Executive (HSE) resulted in a Cheshire-based scrap metal business being fined £1,000 plus costs of £2,000 for failing to have employers’ liability insurance in place.
Employers are legally required to insure against liability for injury or disease to their employees arising out of their employment. It is a compulsory insurance for businesses in Britain and Northern Ireland.
HSE principal inspector Emily Osborne said: “[Employers’ liability insurance] is not a trivial optional extra, it is a compulsory requirement that is designed solely to protect employees.”
A free guide is available from HSE that provides information about employers’ liability insurance in England, Scotland and Wales and who needs to have it. HSENI, the health and safety body for Northern Ireland, also have guidance available.
Export to the EU: Low-value parcel rules change on 1 July
Starting 1 July 2026, a fixed customs duty of €3 will be applied to small parcels valued at less than €150 exported to the EU.
The rate will be applied to all goods exported to the EU by non-EU businesses that are registered in the EU’s Import One-Stop Shop (IOSS) for VAT purposes.
Whether the rate will also be applied to goods sold by traders that are not registered in the IOSS remains under review.
The new fixed customs duty is a temporary measure that will stay in place until a permanent solution to eliminate the customs duty relief threshold comes into force. At that time, all goods under €150 will have customs duty applied at the normal EU tariffs for individual products.
A so-called ‘handling fee’ is also under discussion by the EU Council, however, this is separate to these measures.
Government guidance is available on how to register for the VAT IOSS scheme to report and pay VAT due on imports of low-value goods to consumers in the EU, Northern Ireland, or both.