5 good reasons to pay your invoices in time

As we all know, it can happen to anyone at any time. Peoplefail to payinvoicesfor 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 thesepayment delayshave real repercussions for the party that was expecting to receive theinvoiceamount. TCM presentsFive good reasons to pay your invoices in time. 

Avoid additional costs

One obvious advantage ofpaying your invoices on timeis to avoid payingadditional coststhat will inevitably be added to the initial amount. After all, most traders and companies deal withunpaid debtsby including a penalty clause in the contract that stipulateslate payment interestat variable rates, together with flat-rate amounts. Moreover, there is also what’s known as thelegal interest rateset by the Federal Public Service Finance. For 2018, this rate is set at2%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 at8%a year for commercial transactions (Belgian official journal 24/1/2018).

Established trusted commercial relations

Paying your invoices within the specified time frameis probably the best way of maintainingserenecommercial 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 yourreputation.Paying your bills on timeconveys 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 delaysare expensive for thedebtor, but even more so for thecreditor. After all, a business faced with numerousunpaid debtssees 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-outbankruptcyof a company, as thelate paymentscan 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 tolate paymentsalso clearly have acost.

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: thecreditorwants torecoverthe money owed to them and is highly unlikely to let the matter drop. Moreover, while they do have a cost, numerousdebt recoveryprocedures exist to encourage debtors to pay up. Furthermore, at TCM, 50% of unpaid debts areresolved,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 itto 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 manygood reasons for paying your billas 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 timeis oftenthe easiest solution.

As we all know, it can happen to anyone at any time. Peoplefail to payinvoicesfor 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 thesepayment delayshave real repercussions for the party that was expecting to receive theinvoiceamount. TCM presentsFive good reasons to pay your invoices in time. 

Avoid additional costs

One obvious advantage ofpaying your invoices on timeis to avoid payingadditional coststhat will inevitably be added to the initial amount. After all, most traders and companies deal withunpaid debtsby including a penalty clause in the contract that stipulateslate payment interestat variable rates, together with flat-rate amounts. Moreover, there is also what’s known as thelegal interest rateset by the Federal Public Service Finance. For 2018, this rate is set at2%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 at8%a year for commercial transactions (Belgian official journal 24/1/2018).

Established trusted commercial relations

Paying your invoices within the specified time frameis probably the best way of maintainingserenecommercial 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 yourreputation.Paying your bills on timeconveys 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 delaysare expensive for thedebtor, but even more so for thecreditor. After all, a business faced with numerousunpaid debtssees 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-outbankruptcyof a company, as thelate paymentscan 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 tolate paymentsalso clearly have acost.

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: thecreditorwants torecoverthe money owed to them and is highly unlikely to let the matter drop. Moreover, while they do have a cost, numerousdebt recoveryprocedures exist to encourage debtors to pay up. Furthermore, at TCM, 50% of unpaid debts areresolved,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 itto 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 manygood reasons for paying your billas 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 timeis oftenthe easiest solution.