Trade receivables are the uncollected sales. In France, it represents about 40% of a company's assets or 20% of its annual turnover (about 2 months). One French company out of four encounters economic difficulties due to late payments. This is why it is important to understand this issue in order to adopt good practices according to the different phases: prevention, pre-litigation, amicable reminders or legal collection.

Causes of late payments related to the customer

Late payment is a fact of life. It has afinancial impact on companies. Among the reasons for unpaid customers are the following:

Forgetting
Long and complex invoice validation processes (frequent in large groups or administrations...)
Disputes or disagreements on the nature, the object or the volume of the goods sold or the services provided. More than 70% of late payments are caused by a dispute. Example: quality of invoices, missing supporting documents, non-conforming goods, etc.
- Bad faith
- Financial difficulty or cash flow problem
....

Late payments: causes linked to the supplier company

On the supplier's side, there are also many reasons for late payment:

Incorrect invoices and incorrect delivery
Lack of time or resources dedicated to monitoring and claiming payments
Lack of centralized information and visibility on unpaid invoices
Fear of claiming in order to preserve the relationship with customers
Lack of knowledge of formal notice and litigation procedures to manage unpaid invoices

The main causes of late payment related to the supplier company
28%	Business process
37%	Billing process
16%	Collection process
37%	Company dysfunction

The processes to be implemented in a healthy cash culture

Late payment of an invoice is a frequently encountered pitfall. To best manage this risk while preserving the customer relationship, company managers and decision-makers must implement rigorous internal processes.

Three main categories of processes: main themes
To have reliable and up-to-date information on its customers	Legal data: K-bis extract, share capital, date of creation Financial data. Financial data: as a client's solvency can change rapidly, it is essential to update this information regularly.
Define precisely the conditions of invoicing and payment	Determine a clear inventory policy Categorize by payer profile: isolate bad payers from good payers, differentiate by company size Bill quickly Tracking invoice payment deadlines Ask for guarantees The deposit Pledge and collateral The deposit Know the useful commercial clauses Limit the time it takes for customers to file a claim Arbitration clause with appointment of arbitrator Jurisdiction clause Cover the risk of non-payment (credit insurance - which can be associated with a factoring company
Correctly draft contractual, accounting and commercial documents	Define precisely the General Terms and Conditions of Sale (GTS) by clearly mentioning the payment period of the invoices, the reserves of property as well as the penalties of delay Write legible invoices containing all the necessary information Have order forms, quotes and delivery notes signed