n Late payers Getting started Discuss these questions in small groups. 1. Why do you think some companies are habitual late payers? 2. What are the effects on a business of customers who are late paying their invoices? 3 Ifa business pays its suppliers late, how does this affect the business relationship? 4 How can suppliers deal with late payers? “There's an error in my bill. You accidentally sent it to somone who has no money.” Late payers and small businesses Vocabulary Match these words and phrases (1-11) with their definitions (a-k). 1 bank charges calculation of someone's ability to pay back money which they have borrowed 2 bookkeeping b amount of money that a bank customer with an account is temporarily allowed to owe the bank 3 cash ‘© amount which is less than the level that was expected or needed 4 credit limit d__ amounts of money that regularly have to be spent 5 credit worthiness e money which is immediately available 6 debtor £ operating a business while not having enough money to pay creditors and employees 7 factoring, '§ someone who owes money 8 outgoings sums of money paid by a customer for a bank's services 9 overdraft {system of buying debts for less than they are worth and then obtaining payment for them from the debtors 10 overtrading j_ the job of keeping a record of the money that has been spent or received by a business 11 shortfall ke the maximum amount of money a bank will allow you to borrow Late payersding 1) Work in pairs. Each pair should read Text A, Text B or ‘Text C. Work together and make sure you understand the main points of your text. 2. Form groups of three with students who have read the other texts. Explain the main points of your text, to yourpartners. ‘3. When you have finished, check togather what the texts say in answer to the questions in Getting started. ‘Test A 4. Find words or phrases inthe three texts with these meanings. things which limit your freedom of action (text A) ‘without official permission (text A) charges which are used to punish someone (text A) toa level which is more than is necessary or reasonable (text a) in advance (text A) late (text BY organised (text 8) reasons for something bad (text C) Be CUS Sr eee 1 Late payment continually features in the list of top constraints on business, and the problem ison the increase. If you are onthe receiving end of late payment, It cannot ‘only havea significant impact on your cashflow, leading to ‘unauthorised overdrafts and punitive bank charges, but it ‘ean also eat into your precious time and cause undue stress. 2 Butwhat if you regularly make a habit of paying late? What are the impacts on your business? Research shows that more ‘than one inten (13%) of al businesses that have Text B Ture ber es Aa Ne aed 1 Make sure that you have a process for checking the credit worthiness of new and existing customers. simple and cheap solution is to use acredit-checking service which, for a small fee, wll enable you to assess the financial standing of your customers. 2 Set creit limits for your customers. 3 Have effective processes in place for sending out Involces and ‘monitoring payment from your debtors. Infact, around a third of small businesses only [ook at thelr overdue debtors every month. A simple and cost-effective way to put your finances in order isto automate your bookkeeping. 4 Work out what would happen to your cashflow and overdraft ifyour customers were to pay you late ~ could your business afford it? Keep your bank informed, as they may be able to help, either by providing an overdraft or suggesting an alternative way of financing your debtor, such as factoring. 5 Have sound procedures in place to recover overdue debts. ‘When you contact your customers, record what has been agreed — when they will pay and whether you are going to ‘charge interest. f they fall to pay, consider using a debt- collection service. ‘experienced late payment would never da business with that customer again. Furthermore, 17% would only do repeat ‘business if they were to receve cash upfront and a further 2% would have less trust inthe late payer inthe future. A ‘staggering 52% do nothing —not out of choice but because the clients business is too big and important for them. The message is clear ~f you ae paying your suppliers late, you stand a very good chance of losing thelr supplies. <> ‘Text C Wit eed Se Ted 1. Paying late generally arses from either lack of ‘cash or poorly managed finances. H you are having dificuties with financial management, talk to your accountant. 2 1f you do not have the maney, then you need to look atthe root causes as to wry you do not have the cash. These might be: ~ suffering from late payment yourself ~ falling order book. You need to look at how you can reduce your outgoings. — suffering from overtrading. IF your business {is experiencing rapid growth, ten you may nt be able to generate cash quick'y enough to:pay your bills Talk to your bank, as they ‘may be able to provide overdraft financing. 3 Talk to your suppliers If you cannot pay, give your suppliers a realistic time when you willbe able to pay. 4 Ensure you have budgets and forecasts in place, as these will show you in advance when youmay run outof cash. Contactyourbank = ‘early to seek funding to cover your cash v shortfall. Alltexts from htte:/wwn.clearlybusiness.com Late payers 15 BLetterto a late payer Talking point Listening 1 Discuss these questions in You will hear Astrid Kloof, a credit controller, talking to amall groups. her opposite number in another company. 1 How should you deal with 2/1. Listen to the conversation and complete her notes late payers? below with up to three words in each gap. + bytelephone + by email whe O60 66 FEEL HHS LEENLE = Dylan Rajiv Nava» + tha eye Syste 2. When should you do so? + Reason for non-pogrent: 1 haven't pid — hos 2 a reat + immediately a payment + Informed him we have asked for an extension of 3 becomes overdue + Hic company hac reached its © aftera few days + Ig Sending. written commitment by 5 ‘aly after amonth or two = Will pay within 6 2 Discuss these questions in small groups. 1 How effective do you think a phone call like this is? 2. IfRajiv doesn't pay, what should be the next step? Dear Me Narayan, Grammar workshop a {am wring toremind you that payment on our noice no 472/fr the Complex sentences amount of 3760s sill tstandng AG i ‘ny notes on our telephone conversation three weeks ; eater ee Geuerera ea 1 According 22. my nts ou lepho tion three week Complete the letter tasing the words, yezplaned wm that your nnn ante ing on or phrases from the box below. cashflow problems and aaking payments rom some of your supplies 2 you assur methat you expected payment sory secoringic andthat as 3 ‘wouldmean hat you would be ia poston ose your asaconsequence butalso however account with Prudhomie Luby teen ofthe month atthe atest notonly since which with whom Unfortunately that deadline has now passed, and your failure to pays 2 Join the sentences below using the words given _bezinningtocause our company serious problems. 4 in brackets. adicated during ou telephone conversation. thecosts ous of you non payment have included aking out an overdraft, with the resulting bank 1 The bank has agreed to extend our overdraft for charges and interest. 5 Thave no choice but to inform you another month. They normally handle our has. do weexpect prompt payment ofthe invoice transactions. (which) 7 sn youll haveto pay interest of 5% per month onallunpaid debts 2. Tregret to inform you that we keep a list of late ‘wth ou company unl the noice spa (paets. Wee Mates tneiremtioe wit catia ‘deeply regret having to write to you in this way. 8 ‘until suppliers. (not only / but also) ‘now, youhavealwaysbeena valued customer 9 weenjoyeda 3. We may have to put this matter in the hands of our mutually profitable orkngrelavonship. sincerely hope hat this lawyer. We would regret having to do this. (which) temporary unpleasantness can be resolved 10 wecanseturn ‘4. We sbail oot be supplying you with any further to normal business dealings shorty. Untilsuch time, eget inform {g00ds. informed you about this in my previous ythatweare unable to supply you with any futher goods letter. (as) ‘Yours sincerely 5 Weshoul st ace init of 5,000. My Astrid Kloof ‘accountant tells me this. (according to) er © page 81 (Complex sentences) ee 74 Late payersVocabulary ‘The underlined words and phrases in the letter are formal expressions. Match them with the following, ‘more informal meanings. 1 able ina position 2 amvery sorry 3 awkward problem 4 good for both of us 5 more 6 pay what you owe to 7 promised 8 quick 9 said 10 soon 11 unpaid Listening 2 ‘You will hear William Brook:Hart talking about late payers «at Gifford Engineering Consultancy. 4a) Listen and complete these notes by writing up to three ‘words in each gap. wh sb bb606 SEbLe Hdd DEEDS *# Concentration on late payers in order to reduce problems with + Customers contacted and told 402 + Other methods used whan they have 3 For ate settlement of debts “The people who remind late payers ore members of tres = Some companies have 5 payrnent, ag becouse not 6 has dove for withholding 9b Gifford Speaking ‘Your manager has asked you to give a short talk (of about ‘one minute) to the finance department of your company on ‘one of these two subjects: 1. How to deal with late payers 2, How to avoid taking on clients who are late payers 11 Work with a partner. Choose one of the subjects and. together prepare what you are going to say. 2 Change partners and give your talk to someone who, thas prepared the other subject. Writing Work in pairs. 1. Study Astrid’s letter on the opposite page again. In ‘which paragraph does she: 1 state the reason for writing? 2. refer to. previous phone call? 3. outline Rajiv's excuses and promises? 4. explain how Rajiv has broken his promises? 5 explain the consequences for Prudhomme Ltd? 6 explain the consequences for Rajiv's company? 2 express the wish to continue working with Rajiv's company? 2. Study the following writing task. Discuss which of the points in Exercise 1 you could make in this letter and ‘what details you will have to invent. You work for a company which produces ready- prepared food fr restaurants, On several occasions recently, one of your main customers has been late in selling their account. This has caused your company | cashflow and other problems. Write a letter to the | customer: ‘© complaining about the late payment ‘© explaining the consequences for your business ‘© saying what you will do if payment is not made. 3. Make abrief plan for the letter in note form. 4. Work alone and write the letter. Late payers 5