Samantha White, CEO of My Credit Controllers assesses if calling out late payers can actually tackle this pervasive issue
One of the leading causes of business failure is late payment – even profitable firms can be put out of business if the cash stops flowing. And one of the leading causes of angst for business owners is a customer that owes you money but keeps finding ways to avoid paying. Social media has made it easier than ever before to publicly vent your spleen about this kind of behaviour, but is it really such a good idea?
The number of late payments experienced by UK businesses hit a two year high in 2015, according to a recent study. In recent months I have seen a great deal of discussion online about naming and shaming of late paying clients.
One person who thinks naming and shaming is a good idea is Trevor Tierney, a solar trader that became so annoyed by persistent late payments from his customers that he set up a website (60 days.com) where, for a fee, you can ‘name and shame’ customers and check out people you are considering doing business with yourself.
It might make you feel better to get your own back on your delinquent customers, perhaps seeing it as doing a service to others who can heed your warnings, but I believe that it is best practise to keep your grievances to yourself and look at other options to chase for payment behind the scenes.
First of all, there may be a genuine reason for the payment being late. The customer may not have received your invoice, or they may be disputing it. It would be very embarrassing to go public, and then find out that there was a reasonable explanation after all.
Secondly you may find yourself accused of damaging the reputation of a customer you have named and shamed. BBC news recently reported on a freelancer who had tweeted about a company from Qatar that had not paid its bills. She found herself on the wrong end of a claim for defamation running to £120k.
Finally, you may damage the reputation of your own business and its relationships with other customers. Would you want to risk doing business with a company that takes to twitter to rant about its customers?
The Office of Fair Trading (OFT) has advised against “unfair or improper practices” including “posting messages on social networking sites in a way that might potentially reveal that an identifiable person is being pursued for the repayment of a debt”. It warns that using social networks to pursue debts could be seen as harassment of the customer. While this guidance was for debt collection companies engaged in consumer debt collection, it does show that you really should take the time to think carefully before posting online.
We do not advocate naming and shaming. We think it is certain to reduce the chance of collecting an overdue invoice by annoying the debtor. Credit control is absolutely key to financial health of your company. If you have a problem with a late payment, we would recommend that you use your social network to find professional outside help instead.
Samantha White is CEO at My Credit Controllers, outsourced credit control and business debt collection specialists.