Blog Spot

get book

What our Clients say about ICON...

Quote from Jackie Fisher - The reason we started working with Icon was that I felt we had a good company but I didn’t know how to take it next level quickly…Tony Golley was the first consultant who actually asked me what I wanted, and really listened, what a refreshing change...

Top 10 Tactics For Not Paying.

By Mark Birchall on 24/03/2017 - 2 Comments

Top 10 Tactics For Not Paying.


Many businesses are cashflow constrained because of a combination of reasons. Over my time in finance, I have responsible for collecting over £560m across a diverse range industries, split across small to large customers within the SME arena and managed many credit control teams during my tenure.

This article covers my experience of dealing with companies over 25 years from different industries within an SME environment. It will cover the top 10 genuine reasons I have been given to seek extended free credit facilities.

Ever heard the phrase;
“Sales is Vanity, Profit is Sanity and cashflow is always King.”

My phase,
“Sales is Vanity, Profit perceived sanity, and cashflow is the reality.”

My Experience of Debt collecting.

Even though you have provided the best customer service, for the best price, with the highest quality, (whatever best is) you should feel great making a profit with your customers. Otherwise, why would you continue. Given all this hard work to get it right all the time (GIRATT), why do some companies not replicate the return gesture of simply paying you?

The government was so concerned over the payment abuse of companies that the Late Payment Act was instigated. Although this helped, this also hindered companies due to the fear of losing the customer completely. It is genuinely felt that it is easier to keep a customer than to find a new one.

Once you decide to move into the county court judgement, statutory winding petition, the relationship becomes one of the ability to enforce and collect. I have even seen a domino effect where one CCJ is issued, and everyone jumps on the same process which can cause your funders extreme concern and push a company into administration.

Cash Collection.

I am genuinely staggered how easy credit is granted without any correct capture of key contacts, due diligence being done and contracts not signed. The due diligence does have to take long. I instigated a policy at one company where a new account was set up within 3 minutes of the phone call or email through adopting a tight, workable procedure in place. A competitor would typically have granted £1,000 automatically to any company without any form of checking.  Would you drive your car not knowing who it was insured with?

So why sell to companies in this manner! You can reduce your risk by adopting simple assessments of the customer you are trading with, have tight, and flexible controls in place. Being a commercially focus individual, means riding the highs, the lows and dealing with the good, bad and ugly situations companies get themselves into. Many companies take the narrow-minded view that our finance department is responsible for this area.

From my experience, debt management should be a companywide responsibility where all those in the process providing client feedback to the finance department are also made accountable.

The following are the early warning signals of a collection issue. Some may be genuine, others questionable, some just complete abuse. Either way, these excuses can make a big difference to you.

10 reasons for delaying payment.

  1. Invoices have been sent to the wrong email address.
  2. Invoices sent to the registered office address rather than the accounts address.
  3. Invoices have been sent to the wrong depot in error and not re-directed.
  4. Invoices sent to the wrong person for approval.
  5. We did not think the invoice was for us so we ignored it.
  6. The invoice doesn’t meet our requirements for processing and has been rejected.
  7. The invoice price, quantity, quoted purchase order or description does not agree with our buyer’s records.
  8. The invoice was received after our internal cut off and will be processed next month subject to clearance checks.
  9. The invoice is awaiting internal verification before it can have authorised.
  10. Your invoices per the statement submission disagrees with our system.

Alarm Bells.

I am sure you can relate to some of these reasons given. We all try to be supportive with customers. Some of these may be genuine reasons for non-payment requiring you to plan your own cashflow ahead. However, some may also lead you walking a tight rope of not getting paid. Some could be the alarm bells signifying the company has issues and you need to act now to prevent the bad debt.

Customer Bad Debt Assessment.

It is very easy to focus on one knock with a bad debt. A good policy is to look at the revenue and profit made over the period. You may find you have done very well by trading profitable over many years but had an unfortunate hit.

E.g. 10,000 turnover at 20% Gross Profit Margin = £2,000 before vat.

The £10,000 debt would take 5 years to recover from another customer.

Thus, if you have been trading for 15 years at £10,000 per annum at 20% gross profit, the business has generated £30,000 profit (15x£10,000x0.20), with a £10,000 hit at the end. So, over the entire period you did make £20,000 (£30,000revenue less the 10,000 bad debt).

No one wants a bad debt, so it is a good idea to look at your customer base, the gross profit made by customer to determine these calculations of risk.

The following is a true story.

I once had a customer who saw me at a seminar, and gave me £2,000.  When I asked what for, he said your company was very supportive and I went bust many years ago. Your company was always very professional, we owed you £2,000 and I felt very guilty. I saw your name at the seminar and withdrew the money at lunchtime. When I returned to work the next day, my boss was equally surprised that that I had brought back payment of £2,000 from a very old customer.

Tip of the day.

Remember, it not how fast you collect the money, it is how you collect the money FAST that matters!


Analyse the reasons to see if there is a pattern occurring with your customers or indeed the sector they operate in. Take action by using one of our Icon Business Solutions advisers to help you design and implement a business strategy to help here. Remember this:

Contact your local Icon Advisor for a free no-obligation chat on how *you* can improve matters.

There are 2 comments for this entry. Leave your comment below >>

Brian Moffatt - March/31/2017

My favourite excuse for not receiving money owed to us by a company 100 times larger than us was that they cared for their shareholders so much they would not risk their cash flow by paying us on time. Brilliant!

Steve Burgin - April/24/2017

Good point Brian - and why is poor planning on their part always your problem?

Leave a comment on this article >>

Latest News and Articles

27/03/2018 -
GDPR – why it is (and isn’t) scary We have all heard about the European General Data Protection Regulation (GDPR), and all the massive fines... Read More