ICSM’s CEO Ian Carrotte on the current business climate over late payment (along with some stories on unconventional ways to get paid)

By Harry Mottram: Then ICSM first began back in the late 1980s and early 1990s one of the commonest excuses when pressed for an overdue payment to a supplier was ‘the cheque’s in the post’. He said: “It’s been a few years since I heard that one. Mainly because it has been a long time since someone cut a cheque. In many ways – and I feel like banging my head against a brick wall – nothing has changed. Too many firms string out payment to print companies partly because there’s the tradition – hard to deny – that late payment remains fairly common where firms have a long-standing relationship and the belief is that payment will always be made.”

“There are those who when pushed to pay weeks past the date of the invoice who come up with a string of excuses – all of which we’ve heard before: we can’t find the purchase order; the person who ordered it had no authority, or has left; we can’t find the invoice; there was something wrong with the job; the financial director is on holiday; you invoiced the wrong firm as that was a trade name; our computer system has gone down and IT are working to restore accounts. And so on. Covid of course gave a whole new set of excuses such as everyone in accounts is working from home etcetera. Things have improved since Covid but as Print Week reports there are directors of print firms still being prosecuted for bogus loans – and although increasingly rare those firms don’t pay their suppliers.”

Ian Carrotte said: “I call it the Groundhog Day syndrome. Because the reasons for late payment are the same as they were 30 years ago. Historic debt which becomes a mill stone around the neck of a company. You see it time and again – a huge loan is taken out to expand or to buy new kit and then there’s a downturn or a major client is lost and the expected increase in business doesn’t happen – but they are saddle with the loan repayments. So many firms that go bust are brought down by the taxman who unsurprisingly loses patience with unpaid tax bills and has the resources to apply for a winding up order. Other perennials are hikes in interest rates, increases in energy and fuel costs and wage increases with the Chancellor’s national insurance tax grab last year compounding the problems.”

He said that one of things people ask him about ICSM is whether he has any tips for overcoming late payment from clients without the need for litigation. It reminded him of a story he heard from a print company – and one that has been repeated occasionally in other business sectors. The re-invention syndrome.

He said: “I knew a printer who was owed several thousand pounds by his client – household name – a high street company – and he had tried everything. They admitted they owed the money but still didn’t pay up. So, he went to the firm’s reception with a large cardboard sign explaining why he was there and having asked to see the financial director and to get the payment there and then was told to wait. People would come and go, and they would notice him and his sign – and the word got around. They paid him that morning. That’s extreme but embarrassing a client can mean that’s the end of the relationship – but in my book they are not worth dealing with if they pay so late.

“For run of the mill late payers – a few days or a month say – we have a simple online legal letter that members fill in and email to their customer. Having a notice from a third party – especially if it looks like it’s from a debt collector or a solicitor will work in many cases. But for some firms you must go down the route of the county court. You must take a view – how much is it worth? Set a figure in your mind and decide how much you will spend in chasing a bad debt – and how it will affect you – lost sleep and stress. I’ve known people have breakdowns over such things. The rule is stick to your terms of credit. A day over is late – so chase up immediately before it is a crisis.”

One solution to managing cash flow advocated by some is invoice factoring where a third party pays the invoices quickly and take a percentage and fees to secure payment from the customers of the original firm.

Ian Carrotte said: “On the face of it factoring can sound attractive as the main benefit is improved cash flow, but generally I would not recommend it, especially for printing where margins are all too often very tight. Effectively you are borrowing your own money and being charged for the convenience of doing so. Strong ‘credit management’ can be far more effective than factoring / invoice discounting, especially where profit margins are tight, as essentially, invoice financing is another another cost. And it can be expensive with added fees and conditions as the factoring company obviously don’t want to have problems with non-payment from your customers. It can work in some cases where perhaps a sole trader has a large number of solid and reliable business customers but has little or no time for the paperwork – In these cases Invoice discounting (factoring) can help.”

Ian has seen at least three recessions or down turns in his business life with ICSM with each one different – and yet the same problems arise with customers using it as an excuse to pay late. In some sectors it rarely happens in others like logistics, manufacturing and construction late payment is part of the landscape of credit control.

He said: “It’s about business culture. There was a traditional printer I knew helped on an industrial estate in Devon. He suffered from late payment from customers – both ordinary members of the public like clubs and societies – and businesses. A shop unit came up in his town with enough space for his litho and digital presses – plus a high-volume photocopier and other kit. He moved in – made it bright and welcoming and rebranded his business as an instant print shop. From then on, the customers – the same as before – paid either up front or on collection with no problems with late payers. It is the culture that changed.”

Ian Carrotte said: “The internet has many down sides but doing a Google search on a new customer or the directors of a business can give you a steer. ICSM has the resources to check for CCJs – a give-away someone is dodgy – and their credit record. Companies House of course has records that can be checked – but there is one loophole the unscrupulous use. They trade under one name, but the firm is actually called something else – a fact they hide. So, you may not find a record of the firm you are planning on taking on a customer.”

“And another one I’ve come across before is the reversible name syndrome. The director has three or more Christian names – for instance John, Barry, Paul – which they change the order of on different firms they are directors of in the past – making it hard to trace. Or even reversing their date of birth in the records – 1986 could also be 1968 – and so on.”

“Word of mouth is good – a recommendation from one of their suppliers is worth having – and keeping an eye of their business in general. If financial directors and company secretaries come and go frequently that tends to suggest a problem.”

In conclusion Ian said: “Anything from the government that changes the culture of late payment by giving suppliers more legal leverage to get paid on time is welcome. But it is about business culture as in some sectors prompt payment is normal while in others like construction, logistics and printing late payment is a problem.

“The Fair Payment Code  is being taken up mainly by large companies and firms seeking Government contracts. I’m not convinced it will end the issue – being able to charge court fees, interest and other expensed pursuing a late invoice helps – but there are some people in business who will do anything not to pay up. As a society we are yet to find a solution for that problem.”

Struggling with Late Payers or Bad Debt?

ICSM offers expert credit management and debt recovery solutions that help businesses like yours get paid fast.

• Free online suite of legal letters and final demands
• Specialist team ready to recover unpaid invoices
• Polite, professional mediation to preserve customer relationships
• Hardline legal options when needed
• Late payment interest, compensation, and fees recovered under the Late Payment of Commercial Debts Regulations 2002

Why Act Early?
Passing overdue accounts to ICSM early increases your chances of full recovery. Our multi-channel approach—calls, emails, and letters—ensures the right message reaches the right people at the right time.
We understand that non-payment often stems from miscommunication. That’s why we focus on resolving issues while protecting your reputation.

• Email the CEO: Ian.carrotte@icsmcredit.com and request to recieve the ICSM newsletter which lists firms that are in trouble
• Call: 01454 322234
• www.icsmcredit.com
• Express Park, Bridgwater, Somerset, UK

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