Firms facing cash-flow problems as a result of customers not paying for goods supplied during the pandemic are being urged to put procedures in place to protect themselves.

According to law firm Furley Page, which has offices in Canterbury, Chatham and Whitstable, many of its clients are reporting "severe issues" due to unpaid invoices.

Deborah Geering, senior associate at the firm, explained: “Many businesses have been dramatically affected by the ongoing lockdown and are considering how to limit their financial exposure and potential losses.

“While many businesses are attempting to continue to trade, they are also finding that clients and customers are facing their own financial difficulties, with the result that payment is not always being made for goods that have been delivered.

“Businesses may need to put new procedures in place to protect themselves during the current crisis, including considering advance payment and reducing credit terms and credit limits.”

She suggests where goods have already been supplied but not paid for, businesses should look to see if they have a 'retention of title' clause in their contracts.

She adds: "The clauses are provisions in a contract for the sale of goods which, if properly drafted, ensure title to any goods supplied remains with the seller until the goods are paid for in full. Such clauses should also protect a business in the event that their customer has already sold goods on to a third party, as the proceeds from any onward sale can be recovered to settle any debts owed.

“In the current climate, it is vital that all suppliers review their contractual terms and consider whether they have sufficient protection to enable them to get paid or recover any unpaid goods in the event that the buyer becomes insolvent.

“Where contracts include retention of title clauses and a buyer suffers an insolvency event, sellers should act quickly to recover any unpaid goods supplied.”

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