You all know that we at Corp & Comm love a cliché. There’s always an element of truth to a cliché and they’re usually good life lessons.
In these troubled times, there is one life lesson that will stand your credit control and debt recovery in good stead…. Little and often.
Let’s be honest, the lock-down is not going to end any time soon so as businesses, we need to make plans for at least the next two months. Key to these plans are two cash goals :
1, Get what money you can in quickly.
2, Get what invoices you can raised now.
Here’s our tips to achieving both :
Goal 1, Get paid what you can, as quick as you can.
Look at what’s currently outstanding on your ledger and put some time aside to follow this up.
Don’t feel bullish because you’re asking for money, you’re entitled to it and we’re damn sure you’re not the only one who needs it. Take solace in the fact that everybody is in the same boat, trying to stretch their finances to all to make ends meet. Where you need to, offer payment arrangements with your customers. Not only will this gesture help create some much needed cash-flow for you, it will also help strengthen your customer relationship which can only pay dividends in the future. Your customers will appreciate the gesture and to be honest, most companies will find it easier to pay three lots of £1,000 over three weeks, rather than £3,000 right now.
As we said… Little and often.
Goal 2, Raise what revenue you can, as quick as you can.
Look at what invoices you can raise both now and in the near future.
Review your current work-load. Are you already part way through a job or project that you could raise an immediate invoice for, such as first fix for a contractor, content for a web developer etc. Raise an interim invoice for ‘work done’ and send it sent to the customer. You create the opportunity for much needed revenue and the customer will appreciate smaller, incremental bills…. Little and often.
Finally, when we do all get back to some normality, the pressures on businesses will be even greater because they’ll be no more Government backing. When you’re back to full speed use the same brief. Instead of completing lots of work and then raising a larger bill later, split your new work up into segments and bill lesser amounts quicker to speed up payments and most importantly cash-flow…. Little and often.
The Covid crisis will have a serious effect on how we conduct future business and will force many businesses to look at how they do things and how they can change for the better. These tips above are just some ways of maintaining ‘cash flow continuity’ and are a great start in managing a steady ship, rather than the boom and bust mentality of previous years.
The UK’s political and economic climate continues to be one of the toughest in recent history. With the UK’s economic growth running at the lowest in 9 years.
As we know several big brands have been forced to close, with a steady stream of others following month after month. The ‘ripple effect of debt’ on smaller businesses is significant and felt across industries.
November is a month of reflection and looking back so it felt right to give thought to 16k+ companies who went into insolvency during 2019. What can we learn to limit further losses ?
Recent research from Hitachi Capital Business Finance (HCBF) shows that late payments are affecting small business of all sizes across all industries:-
– 75% of small businesses (10-49 employees) are dealing with late payment issues.
– Whereas 50% of sole traders are force to deal with debtor issues.
It is a fact that late payments are notoriously hindering the ability of businesses to progress – not to mention the precious time wasted chasing overdue payments.
Imagine This Scenario.
You won the order, provided a great service or product and sent your invoice as agreed but when it’s time for them to pay you, they appear to have fallen off the face of the earth. Your calls are never returned, your emails ignored. You have concerns and maybe even heard a whisper that the business is ‘struggling’ . You fear the worst for your business, but what can you do?
Have you already spent too much time on this one client and have other priorities to focus on. After all, investing your time in an invoice already raised is not going to increase the value of the invoice. Maybe now is the time to hand the debt over to a recovery agency like us to collect?
If you’re determined to press on yourself, then we’re still there to advise and guide you as to the best way forward. Why not benefit from our resource and techniques to aid in your recovery and diligence. You will soon be able to tell whether you’re going to be paid, or whether your debt may be lost.
We’re whispering it quietly but the festive ‘C word’ is on the horizon.
Yes indeed, Christmas is coming and love it or hate it, as a business you must be prepared for it.
The invoices you raise now, will in most cases fall due at the end of November. This means that the monies you raise from October invoicing will be your ‘Christmas Cash-Flow’.
December is notoriously a troublesome and expensive month.
Bills and wages are not the same as in ‘normal months. Add seasonal factors such as Xmas bonuses, parties gifts etc and suddenly your expenditure is higher than usual.
Couple this with the fact that most businesses close for a period over the holidays and you’re quickly faced with the perfect storm of having to fund an increased four-week expenditure period whilst perhaps only having a three-week working period to raise revenue.
Suddenly the actions you take now become so much more important.
As both clients and contacts of ourselves will know, there is no cast iron way of guaranteeing that an invoice won’t be paid late but there are ways that you can minimise that risk.
1. Make sure that your invoice holds the correct written information.
List the customer’s information correctly. Make sure any description of goods/services provided is accurate. Ensure the price is as quoted and the invoice is dated correctly.
2. List on the invoice the payment information the customer needs to pay you.
Make sure your complete bank details are on your invoices : bank name, sort code and account number. Include your payment terms and most importantly, the date for payment.
3. In December, have a ledger to hand to see what invoices are owed…. and action it !
In most cases businesses will only be trading for three weeks in Dec. Be proactive with your ledger, don’t delay when an invoice is overdue. If the invoice is fair, it deserves to be paid.
Help is to hand if needed
If you don’t have a plan to action your debtors, or struggle to implement your processes, then don’t delay, use your peer support network and contact usfor all the help, advice and guidance you’ll need to enjoy a stress free end to 2019.
For more helpful hints to aid your credit control please review our other blogs.
Merry Christmas Folks, have a good one. From all the team at Corp & Comm(01535) 65 45 94.
We had a meeting with our local MP a couple of weeks ago to discuss how Brexit will effect the credit management of businesses.
Here at Corp & Comm we live by the words we preach and we’re prepared to stick our neck out by stating we’re confident we’ll leave the EU without a deal.
If so, market forces dictate that there will be less money in the economy. Demand will remain the same or perhaps increase, whereas supply will probably decrease. Inevitably this will bring an increase in cost. Meaning an increase in expenditure levels, leading to less surplus money to meet creditors demands for payment.
Why tell me this…?
The reason is we want everybody to be prepared, to review what monies are owed to them and to have a plan to take action if and when needed. We want you to be first in line for payment, so here are our hints and tips, so that everybody can at least have some idea how to be P.E.R.F.E.C.T when the time comes to asking for your monies, without it being detrimental to client relationships.
Have your call script to hand so to be both concise and professional.
Be bright and alert. Nobody wants to talk to a grump.
Ask yourself if the debtor can meet your request or will you need to negotiate.
Don’t go off track. You’ve called to ask for your money so ASK FOR IT !.
Although you need to be firm, you must also understand the debtor’s position.
Try to form a bond with the customer, they’ll be more likely to resolve your claim.
Always remember why you’ve rung, you need your money so make this your goal.
If you would rather spend your time on other priorities and use a third party to broker payment, we are here as a trusted payment partner. We save your time, allow you to remove yourself from chasing payments and have expertise to get you paid quickly .
You can outsource your end to end Credit Control or individual Debt Recovery, check out the rest of our website www.corpandcomm.com
or call us on: 01535 654 594
Action is the key, as our clients testify :
“When Rob first mentioned his Credit Control service…it sounded too good to be true. I had a list of customers who needed constant prompting to pay their invoices, but I didn’t have enough time to contact them all and still get on with my main workload. Rob and his team now carefully and expertly look after my customers and encourage prompt payment of their invoices. Having them look after my business income, means I’m free to focus on the part of the business I really enjoy. Almost immediately, the turn-around in my finances helped rescue my cash flow and keep both the bank manager and my wife happy.”
Due diligence – If something doesn’t feel right, act on it
Recently we were instructed to investigate the matter of an unpaid, £25k account. Something didn’t feel right about the claim, right from the start.
Our investigation showed a complicated trail of untruths and fraud. Including fake websites, identity fraud and hacked emails. We immediately advised the client to call in whatever guarantees they held but the prognosis wasn’t good.
This isn’t the outcome we want for any of our clients. So, following this costly and inconvenient process, we have been able to educate our client on how to strengthen their processes. Central to their improvements was incorporating simple but effective ‘due diligence’ checks. These checks provide business owners with a greater volume of business and financial information about their potential clients. Which will then aid them in deciding who they deal with next time.
Don’t be worried to ask for client details. Like many things in business, its the way you ask. Having processes like this in place is professional and should provide client reassurance.
1.Treat every customer as a potential debtor !
2.Have an account opening form. Make sure you know who you’re dealing with.
3.Compare and contrast paperwork e.g. purchase orderhttps://www.thegazette.co.uk/s -Is everything as it seems?
Regular readers know that we advocate checking and double checking all prospective client and supplier data. The more financial information you hold about a contact, the more informed your decision making will be and the more limited your exposure and risk.
Imagine this, two people come to you, promising the earth. You’ve heard of them before but you need to learn more before you can decide who best to side with.
For the sake of this example, let’s call one
Alexander Boris de Pfeffel Johnson (or Boris to his friends) and the other
Websites – Check the clients own site, look at reviews etc
Account details – Have a pro-forma to collect client details. If you would like a blank template, email us
Simple due diligence shows us
Was born in June 1964 and has a known address in London N7.
Official records show that Boris has only ever been a director of one company, Finland Station Limited.
The company was formed in April 2006 and for the first 11 months was actually known as Blackrock Productions.
Boris was a director from the inception of the business but resigned his role in May 2008.
The business was subsequently closed down in April 2016.
From 2010, the business had only ever filed dormant or small business accounts and as a result, the established trade reference agencies last rated the business as high risk.
From this point, Boris does not appear to have a direct responsibility in any limited company business and so one may question both where his income is derived and his financial strength, key questions to ask when offering goods or services on credit.
Jeremy on the other hand :
Was born in November 1966 and has a known address in Farnham, Surrey.
Records show Jeremy has a history of creating and managing businesses as far back as 1990.
The majority of said businesses continue to exist to this day.
Perhaps most successful was Hotcourses (Hotcourses Foundation) that was rumoured to have been sold in 2017 for around £30M, netting Jeremy a reported £14M.
Jeremy continues to appear to be listed as a director of the business and although it is believed that his focus may be on other matters, there may be a dividend income to be coupled with his recent investment return.
In short, had our new client conducted the same simple diligence checks that we encourage all of our contacts and readership to complete, they could have avoided the prospect of a long, drawn out battle for money and power…. Unlike Boris and Jeremy J
If you have any questions or would to know more about our services please get in touch – Contact Us
Ah Summer Time…. A time for unnecessary sun cream purchases, lonely garden furniture and barbeques in the rain.
However it’s also holiday season and just as business owners need to plan their own holidays, they also need to plan for the effect holidays can have. After all, you don’t want to be giving your cash flow a holiday too do you ?
Wages still need to be processed and paid. Bills and invoices still require payment. Therefore you need ‘your own’ invoices settled promptly and accurately too, in order to keep the cash flow moving and ultimately allowing you to have a stress free, well deserved holiday.
If you’re already a Corporate and Commercial credit control customer, then you can just kick back and relax, knowing that you have a dedicated credit controller to be on top of it all for you.
However if you are short on time, resource or desire, you may need these tips:
3 Easy Steps to Avoid Cash Flow Stress when on holiday.
Remove any potential payment delays. If there’s a query that you’ve promised to resolve, get it done. Invoices are not going to be paid whilst an issue remains. Don’t give a debtor an excuse for delaying payment until you return by saying… ‘you were meant to sort that for me’.
Invoice promptly and correctly. If there’s an invoice that can be raised, raise it. Even if it’s for part of a project, get the invoice raised. It’s better to have some monies coming in whilst you’re away than none at all.
Plan for payment. Send an email with the invoices that fall due in your absence to your customers. Something along the lines of…. ‘Dear John, just a quick note to supply you with your invoice that will fall due on the 16th August. I’m away for a few days beforehand so just felt it prudent to get this across to you just in case. My accounts team are on hand should you wish to discuss this further, otherwise we’ll keep an eye out for your payment on the day’.
In short, treat your accounts as you’re treating your impending holiday. Make a plan, prepare and execute. Taking these simple steps before you go can guarantee a good night’s rest whilst you’re away. Safe in the knowledge that you’ve done what you can to maximise the return of your monies.
We understand that it’s hard enough to build and maintain a business, without having to fund your clients business too!
Corp & Comm deal with many small business owners who are effectively providing interest free loans, in the form of late payments. So we’re often asked:-
“What late payment interest can I add onto a debt ?”…
“Do I need to mention costs in my terms ?”…
“Are there other fees or penalties I can apply ?”
Here is our advice
You are entitled to add costs and interest on any legitimate business to business debt.
Irrespective of whether your terms and conditions state that you can or indeed will. Government legislation allows you to add three basic additional costs :
Late payment compensation – Set at £40, £70 or £100 depending on the value of the debt.
Late payment interest – Calculated at 8% above the current Base Rate.
Reasonable debt recovery costs – Usually around 10% of the total debt value.
Terms & Conditions
We always advise that your terms and conditions should make reference to your entitlement to add allowable costs to any legitimate, unpaid account. However you must ensure that these costs are reasonable and not excessive.
As a result, we advise you use the above guidelines as your basis to additional costs. You may well feel that you should be adding more but the challenge is that the more excessive your demands become, the less likely you are to be paid.
A simple addition to your terms along the lines of…. ‘Whenever there is a payment delay upon a legitimate invoice and our agreed payment terms are exceeded, we reserve the right to charge all allowable late payment costs, as per Government legislation, found within the Late Payment of Commercial Debts Interest Act.
If you have additional questions or would like help with recovering late payments please get in touch.
Politics!! – It affects business whether we like it or not.
Many have tried to turn a blind eye (and ear) away from the ‘B word’ or Brexit!
However, there are some key considerations to remember when it comes to supply and the subsequent credit management.
In various industries there is talk of contingency measures being taken, to mitigate potential supply problems from March. One of the measures being banded about is ‘stockpiling’.
Typically, this will have a greater impact on the supply of goods but service industries may experience issues too. For example if paper prices increase, this would have a bearing on printers, training companies e.t.c. having a domino effect.
Now there may be some whom will live with the mantra… ‘make hay whilst the suns shines’ but we must all be aware of the risks that increased stockholding could bring and have contingency plans:
You’ve carefully vetted and checked your customers and have determined a credit limit that both you, ‘the Supplier’ and the client, ‘the Buyer’ are comfortable with. Should the Buyer suddenly exceed this limit, without the guarantee of a pending order to fund the increased spend, are they going to be able to clear the larger supply invoice ?
So the Buyer has a warehouse full of stock ‘just in case’ but a larger stockholding is not a pre-cursor of larger revenue. In fact, it could lead to quite the opposite. Should there not be an increased demand for items, the Buyer may be forced to sell at a lesser price, which leads to lesser revenues, a squeeze on their cash-flow and decisions as to which Suppliers to pay.
Finally let’s not forget the possible issues the Supplier may face with stockholding. The costs to any Supplier in fulfilling a larger Buyer’s order obviously increase. The question any supplier should ask is… can I afford to invest in fulfilling this new order and if so, how can I mitigate the exposure and risk of the costs for same ?
There are a few key principals as to how to mitigate invoice exposure and risk, we’ve covered them previously in both our past articles and on our various website blogs such as ‘The Ten Commandments’
If you want to know more, then contact our team today.