5 good reasons to pay your invoices in time

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As we all know, it can happen to anyone at any time. People fail to pay invoices for many reasons. They might forget, lose a document or have insufficient cash flow, or they might be arguing over the amount or simply refusing outright to pay. However, probably less well known is the fact that these payment delays have real repercussions for the party that was expecting to receive the invoice amount. TCM presents Five good reasons to pay your invoices in time.

 

Avoid additional costs

One obvious advantage of paying your invoices on time is to avoid paying additional costs that will inevitably be added to the initial amount. After all, most traders and companies deal with unpaid debts by including a penalty clause in the contract that stipulates late payment interest at variable rates, together with flat-rate amounts. Moreover, there is also what’s known as the legal interest rate set by the Federal Public Service Finance. For 2018, this rate is set at 2% a year for private business between natural and legal persons and for transactions between private individuals and retailers (Belgian official journal 11/1/2018). For the first half of 2018, it is set at 8% a year for commercial transactions (Belgian official journal 24/1/2018).

Established trusted commercial relations

Paying your invoices within the specified time frame is probably the best way of maintaining serene commercial relations. Establishing a relationship of trust with your partner can be highly beneficial in the long term. Moreover, remember that your supplier may also have to deal with cash flow problems of their own.

As well, don’t forget that these commercial relations play an important role in upholding your reputation. Paying your bills on time conveys an image of stability, honesty and financial robustness. Suppliers are also more willing to grant discounts to clients who pay promptly.

Late payment costs money

As mentioned above, payment delays are expensive for the debtor, but even more so for the creditor. After all, a business faced with numerous unpaid debts sees its cash flow squeezed and may in turn run the risk of being unable to make scheduled payments such as its own suppliers’ invoices or even its employees’ salaries. This type of situation can sometimes even lead to the out-and-out bankruptcy of a company, as the late payments can rapidly generate a cascade effect that benefits no one.

We should also mention that the recovery procedures put in place by individuals and companies in response to late payments also clearly have a cost.

You’ll end up paying anyway

If you can’t provide a valid reason that is accepted by the supplier, you’re going to have to pay up. Don’t be under any illusions: the creditor wants to recover the money owed to them and is highly unlikely to let the matter drop. Moreover, while they do have a cost, numerous debt recovery procedures exist to encourage debtors to pay up.

Furthermore, at TCM, 50% of unpaid debts are resolved, 50% of them without going to court.

You wouldn’t like to be paid late yourself

Lastly, the ethical issue clearly comes into the equation. If you sell a service or asset to somebody, you want it to be paid for on time. This seems logical to you, so what’s good for the goose is good for the gander.

As you’ll have gathered, there are as many good reasons for paying your bill as there are for not paying it. However, one thing’s for sure: in order to avoid  problems, costs and additional procedures that could be long and costly for you and your debtor, paying your invoices on time is often the easiest solution.

5 good reasons to pay your invoices in time

Paid stamp

As we all know, it can happen to anyone at any time. People fail to pay invoices for many reasons. They might forget, lose a document or have insufficient cash flow, or they might be arguing over the amount or simply refusing outright to pay. However, probably less well known is the fact that these payment delays have real repercussions for the party that was expecting to receive the invoice amount. TCM presents Five good reasons to pay your invoices in time.

 

Avoid additional costs

One obvious advantage of paying your invoices on time is to avoid paying additional costs that will inevitably be added to the initial amount. After all, most traders and companies deal with unpaid debts by including a penalty clause in the contract that stipulates late payment interest at variable rates, together with flat-rate amounts. Moreover, there is also what’s known as the legal interest rate set by the Federal Public Service Finance. For 2018, this rate is set at 2% a year for private business between natural and legal persons and for transactions between private individuals and retailers (Belgian official journal 11/1/2018). For the first half of 2018, it is set at 8% a year for commercial transactions (Belgian official journal 24/1/2018).

Established trusted commercial relations

Paying your invoices within the specified time frame is probably the best way of maintaining serene commercial relations. Establishing a relationship of trust with your partner can be highly beneficial in the long term. Moreover, remember that your supplier may also have to deal with cash flow problems of their own.

As well, don’t forget that these commercial relations play an important role in upholding your reputation. Paying your bills on time conveys an image of stability, honesty and financial robustness. Suppliers are also more willing to grant discounts to clients who pay promptly.

Late payment costs money

As mentioned above, payment delays are expensive for the debtor, but even more so for the creditor. After all, a business faced with numerous unpaid debts sees its cash flow squeezed and may in turn run the risk of being unable to make scheduled payments such as its own suppliers’ invoices or even its employees’ salaries. This type of situation can sometimes even lead to the out-and-out bankruptcy of a company, as the late payments can rapidly generate a cascade effect that benefits no one.

We should also mention that the recovery procedures put in place by individuals and companies in response to late payments also clearly have a cost.

You’ll end up paying anyway

If you can’t provide a valid reason that is accepted by the supplier, you’re going to have to pay up. Don’t be under any illusions: the creditor wants to recover the money owed to them and is highly unlikely to let the matter drop. Moreover, while they do have a cost, numerous debt recovery procedures exist to encourage debtors to pay up.

Furthermore, at TCM, 50% of unpaid debts are resolved, 50% of them without going to court.

You wouldn’t like to be paid late yourself

Lastly, the ethical issue clearly comes into the equation. If you sell a service or asset to somebody, you want it to be paid for on time. This seems logical to you, so what’s good for the goose is good for the gander.

As you’ll have gathered, there are as many good reasons for paying your bill as there are for not paying it. However, one thing’s for sure: in order to avoid  problems, costs and additional procedures that could be long and costly for you and your debtor, paying your invoices on time is often the easiest solution.

Don’t wait another second – collect your money

Focus on your business, we’ll take care of your outstanding payments. Contact us to find out more.

Don’t wait another second – collect your money

Focus on your business, we’ll take care of your outstanding payments. Contact us to find out more.