Butter-soft payment terms
We all suffer from late payments. In practice, Dutch SMEs grant the most credit. Even among themselves, by the way: payment problems slide down the chain. Legal payment terms are butter soft. Large buyers are in a position to dictate their terms - and do so. The 60-day maximum has been stretched to 90 or even 120.
The blacklist
MKB Nederland's blacklist is not a new idea. Several industry associations (construction, fashion) already have alert lists that their members can add to and consult. Privacy laws limit the scope of such blacklists, if they are allowed at all. And how do they stay up to date?
The appropriate tool when payment terms are exceeded is to collect fines and/or apply penalty interest. But no entrepreneur who feels like putting the relationship with his customer at risk like this.
How can you guard against late payers?
Meanwhile, this structurally late payment does put pressure on the company's liquidity position. How can you guard against it? Increasing your credit limit is the most obvious solution. What to do if your maximum credit ceiling has been reached, while new orders keep coming in? All that outstanding balance becomes a costly solution.
Factoring can then be more attractive: from day one, payments are made: butter to the fish. You no longer have to worry about the outstanding balance and, as an entrepreneur, you have your hands free to follow up on promising expansion!
