How do I protect my cashflow? There is little profit to be made from empty promises of payment!Price Bailey 30th Jun 2021
UK small and medium-sized businesses are owed an estimated £32.4 billion in late payments from debtors, according to a report by Bacs Payment Schemes (Bacs).
Cash is the lifeblood of your business, and there is little profit to be made from empty promises of payment. Of course, there’s an inevitable element of risk in sales – you can’t confine yourself to just ‘safe’ customers – but you can go a long way to limiting the risk.
- Thoroughly research the background of the customer. This could be as simple as speaking to other people who’ve dealt with them.
- Ask for cash in advance or on delivery (although this might not be practical with larger companies with strict payment procedures).
- Send the customer your terms and conditions, and ask for approval – before you start working with them.
- Get to know how each customer’s payment system works. This can be especially important with big companies, who might have very formal procedures in place and could refuse to pay without a purchase order.
- Introduce yourself to the person who’s responsible for drawing cheques and making payments.
- Offer prompt or early payment discounts. But be careful how much you give – you don’t want to eat into your profit margins.
We can offer you an outsourced credit control service, helping you maximise cash flow, reduce your need for bank borrowing, reduce bad debts, and concentrate on running your business.