Should one Name and Shame Late Payers?
When someone pays you late and makes you really fight to get your money it can really make your blood boil. You may vow to never do business with them again. But sometimes that is not enough. You want to tell the world what kind of people they are to do business with. You want to publicly name and shame them as a late or bad payer.
Tempting as it is to Name and Shame, is it a good idea?
Cash flow problems are the leading cause of business failure and late payment is one of the leading causes of a cash flow crunch. You’ve paid for supplies and you’ve paid your employees in order to complete an order but when your customer fails to pay you then that leaves you pout of pocket and it can cause cash flow difficulties which prevent your business from fulfilling future orders. When the cash stops flowing, many firms, even profitable ones, can be forced out of business.
Continually ignored letters, emails and phone calls; spurious and changing excuses from a customer that owes you money is enough to get the blood boiling of even the most laid back business owner, and social media has made it easier than ever to vent your anger.
With late payments continue to appear regularly in surveys as one of the biggest headaches experienced by UK businesses, it is perhaps unsuprising that there has been considerable discussion online about naming and shaming of late paying clients, but is it a good idea?
While it might feel good to get your own back on customers that don’t pay their invoices on time, perhaps justifying it as a public-spirited warning to others, it is often best practise to keep the problem private and look at other options to chase for payment behind the scenes.
There may be a genuine reason for the payment being late such as the invoices is in dispute or that it hasn’t been received. Before speaking out you need to make certain you have checked that these options are not a reason!
By speaking out you could be accused of damaging a client’s reputation. For example it was reported recently that a freelancer who used Twitter to name and shame a Qatar-based company was hit with a legal claim for defamation running to £120,000. You also run the risk of damaging your own reputation and relationships with other clients. After all who wants to deal with a business that takes to twitter to rant about their clients?
The Office of Fair Trading advises against using social networks to pursue debts – and warns that doing so could be seen as harassment of the customer. In guidance aimed at debt collection companies, the OFT lists “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”. Whilst this guidance is aimed at consumer debt collection practices, it does highlight the perils of naming and shaming and that you should take the time to think before posting any such messages.
The Credit Protection Association does not recommend the public naming and shaming of late payers. We believe that it could be counterproductive and almost certain to harden positions and significantly reduce the chance of collecting an overdue payment. It shifts the debate from proper payment to potential defamation. Credit control has never been so vital for the financial health of your company. If you have a problem with a late payment, instead seek professional outside help from a specialist company such as CPA.
How we can Help:
- We can chase late payment on your behalf. As a third party, when we get involved we are able to chase payment effectively while maintaining your goodwill with the customer.
- Within the CPA members only area you can search for commercial debt defaulters which lists privately all the companies that are reported to have failed to pay any our members in response to our collection services.
- You can access our commercial credit reports which credit rate your customers and which take into account payment data collected from many sources.
James Salmon
18th September 2017
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