Small businesses are extremely vulnerable to cash flow problems, and even the slightest slip in payment dates can leave the business unable to pay its suppliers and even staff salaries. In many cases, big suppliers don’t pay their smaller suppliers quickly enough to keep the small businesses running, and as a result the small business finds it simply can’t make ends meet.
News that one of the oldest agricultural firms in Lancashire has entered administration has been met with shock and dismay. Riley Brothers International Haulage Ltd, the most recent iteration of a company with a history stretching back more than a century, entered administration on the 18th of December 2015 with the loss of more than 130 jobs.
Read more: 'Shock' as one of Lancashire's oldest agricultural firms enters administration
When you sign up a new customer or client, it’s tempting to skip the formalities. New customers are always keen and it seems like nothing can go wrong. The last thing you want to do is sour the relationship, or risk losing a client to a competitor. If you ask for a deposit, are you at risk of scaring them away?
In truth, most businesses are used to paying deposits especially if they are dealing with freelancers or micro businesses, and there are plenty of good reasons that you should ask for one.
Read more: Four reasons you should ask your new client for a deposit
Most businesses have experienced the worry and inconvenience of a client that always pays late. Short of ditching the client (and we are perfectly comfortable with advocating that as a tactic), there’s no rapid solution to the problem. But you can improve your chances of getting paid if you subtly change your credit control processes.
In this article we will explore a few easy ways to help you manage those 'tricky' clients and the excuses they use to delay payment beyong agreed credit terms.
This may seem obvious, but can your client or customer actually afford to pay your unpaid invoice? If they can afford to pay, will they pay on time (if at all)? The only way to get answers to these important questions is to source credit information, either from a third party provider or direct from Companies House.
If you are new to credit reports Safe Collections have some tips on how you can find the data you need to make an informed credit decision.
If, despite your best efforts, you have invoices outstanding, don’t take it personally. According to research 88% of UK businesses have been affected by late payments.
So how does your company go about recovering the monies that are outstanding?
When you have an unpaid invoice, it can be difficult to know how to handle it especially if you are a small or micro business. Profitable business relationships are built on personal relationships so it can feel tricky to pursue what is owed without damaging the relationship.
But business is business and you are doing nothing wrong in expecting prompt payment from your customers and by chasing your money if they fail to pay as agreed. So what is the process for chasing up an unpaid invoice?
Although many small and medium-sized businesses know the importance of background credit checks on new customers, a lack of familiarity with the process of actually carrying out a credit check can lead many to overlook this crucial step in their risk management.
Safe Collections have teamed up with credit check specialists Experian to make it easy and affordable for freelancers and fledgling businesses to begin credit checking new customers.
Read more: Safe Collections and Experian launch '99 for £99' credit report deal
