When it comes to managing your finances in business, knowledge really is power. And this is never more the case than when you are signing agreements to sell your products and services.
As a creditor, the main thing you want to know is whether you are going to be paid fairly and on time. The last thing any business wants to do is get into an arrangement and end up not getting paid.
For thousands of small to medium sized businesses, cash flow is probably the single most important aspect of financial management. And yet when it comes to planning and forecasting, it often receives scant attention. Indeed, many businesses unfortunately only realise how crucial cash flow is when problems occur.
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?
For small businesses, the internet has proved to be a great levelling ground, making winning custom less about size and brand power, and more about simply topping the search results.
But as more people prefer to pay remotely for goods and services, are small businesses at risk of losing custom - or worse, going unpaid for work done - due to their lack of good electronic payments technology?
Whether you're in business on your own, or part of a company, it's essential to protect your income - and one of the greatest areas of risk is when you extend a line of credit to a customer.
Remember, any time you carry out work, or provide goods or services, without taking payment upfront, you are effectively investing in your customers company.
