ABOUT THIS EPISODE
In this episode of Minimise Debt, Maximise Cash, host Emma Reilly (CEO of Top Service) introduces a discussion featuring Nicola Hannant from a leading supplier of cement and concrete products. Moderated by Philip King (Non-Executive Director), this segment explores how their company successfully implemented late payment interest and compensation charges, navigating internal concerns, commercial pushback, and the mechanics of invoicing late fees.
Key Topics
- IntroductionEmma Reilly opens the episode, outlining Top Service’s mission to help the construction industry maximize cash and minimize debt. She introduces Nicola Hannant and Philip King.
- Overcoming the Fear of Implementing Late PaymentsPhilip King notes that many companies hesitate to charge late interest out of fear of losing customers. Nicola explains that historically, her company absorbed the internal costs of bad debt and historical write-offs due to the perceived burdens of legal action. They ultimately pivoted after reviewing their aging debtor portfolio with partners and receiving guidance on late payment compensation.
- The Shift to Legal Action and Debt CollectionNicola highlights how starting with basic "letter before action" charges (£40, £70, and £100) generated positive movement. This shift took the financial burden of legal action off their internal department, making the team less hesitant to escalate overdue accounts.
- Evolution of the Charging StrategyNicola outlines how their strategy evolved from a single charge on the overall debt to charging interest and compensation per invoice over the last two to three years. She also explains their in-house process for handling late payment requests, such as when a customer asks to extend payment terms or pay later in the month.
- Achieving a 90% Success Rate and Handling Commercial PushbackNicola reveals that their approach is roughly 90% effective. She shares how they arm their commercial teams and collections agents to counter client pushback by using everyday analogies—reminding customers that banks, mortgages, and credit cards all charge immediate fees for missed or late payments. For the remaining 10%, the company engages in negotiations or reduced charges.
- The Logistics of Invoicing Late ChargesResponding to a question from a listener named Sarah, Nicola details how the charges are applied. For internal/in-house management, late payment fees are raised as a separate, distinct invoice while the account is placed on hold. For external escalations managed by partners, the charges are applied directly through the "letter before action" stage rather than a standard invoice.
- Future Changes to Statutory FeesPhilip addresses a listener question from Allison regarding whether the statutory rates (£40/£70/£100) will increase. He notes that while a government consultation took place last July, no changes to those specific flat fees were mentioned. However, he points out that the current interest rate environment (providing an 11.75% recovery rate at the time of recording) serves as a robust recovery tool for businesses.
- Outro & Contact InformationEmma Reilly concludes the episode, inviting listeners to reach out via LinkedIn (search for Emma Reilly Top Service) with any follow-up questions and reminding audience members to subscribe.
Connect with Us
Top Service: Search for Top Service Limited on LinkedIn
Emma Reilly: Search for Emma Reilly Top Service on LinkedIn
Subscribe to Minimise Debt, Maximise Cash on your favourite podcast platform so you never miss an episode!
