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.
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.
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?
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.
When Prince William, the future King, champions a cause, people usually sit up and take notice.
One topic the Prince is bringing to the fore is mental health. So with this being Mental Health Week, we at Corp & Comm felt it prudent to highlight the steps you can take to reduce a business’ financial concerns and worries.
There is a widely accepted link between financial wellbeing and mental wellbeing. Although it is the consumer element of debt that makes the news, there is a very real necessity and importance to address the requirement to have commercial financial wellbeing on an even keel.
Research from Nesta, the innovation charity shows that 40% of British entrepreneurs have admitted that managing their finances and banking has become the most stressful part of running their business. Being forced to give up evenings and weekends balancing the books, is unnecessarily burdensome. The stress is taking its toll with 17% saying it has made them unwell.
Financial gain may not be everybody’s motivator but it is certainly an enabler. Every business owner knows that when their business is doing well, they can afford to pay the correct wages, order stock, invest in technology etc which in turns boosts everybody’s wellbeing.
The simplest way of summarising how to achieve commercial financial wellbeing is this : Ensure that your incomings either match or are above, your outgoings.
Ten Commandments of Credit Control
We at Corp & Comm champion ‘The Ten Commandments of Credit Control’. Through our training days and university presentations, we encourage everybody to factor at least one or two of the Commandments into their day to day credit control process, to ease the burden.
Good credit control is measured by having a successful, robust process in place that can be applied to each and every matter, irrespective of size, age or customer. The ability to keep systems uniform, exact and regular removes the stress and anxiety of reaction and then action.
Having a plan in place and sticking to it, allows each and every business owner to be confident in their ability to recover their monies and in doing so, move on to other more pressing matters whilst all the while maximising the payments into their bank.
As we’ve said, finance may not be every person’s motivation but finance is both the key and the lifeblood to every business. Without cash, every business will fail. Simply apply just some of these simple steps and take action to ensure that your business’ finances don’t become an issue.
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.
The New Year is always full of promise. The challenge is whether we can continue to stick to our well intentioned promises.
We often make promises to alter ourselves, our lifestyles, our environment but how often do we promise to alter the way we look at our business
Sadly running a successful business can be a drain on your time. Often the clamour to service clients and fulfil orders takes over the opportunity to really look at your business. Including analysing your exposure and your risk.
We all know that there is ‘no better time to start something new than the present’ but the New Year also brings us a ready-made opportunity for change.
Take a little time during the holiday period to study or analyse your customers payment habits. Is there a particular customer who has taken longer and longer to pay ?
If so, make a note on your accounts system to flag them up as a concern. Then make them your priority when you’re conducting your credit control, contact them first. The quicker you action a concern, the speedier you are to get paid.
Is there a particular customer who has consistently ordered more goods than your suggested credit limit ? Now is the time to conduct some credit and diligence checks on that customer. Make sure that they are worthy of the extended credit limit that you are giving them ?
If they are, then write to them to extend their credit limit. Your customer will appreciate the vote of confidence and may even provide further orders. If they are not worthy of additional credit, flag them up on your system and every time they go past their limit, contact them immediately and ask them for payment to bring them back in line.
New year is the time for new starts and new beginnings, so let’s all start putting best practice into our businesses.
If we can be of help with recovering outstanding debts or remove the time you spend chasing payment by taking on your credit control please get in touch>>>
Large company failures…. They make the news on an almost weekly basis.
Big high street brands such as Toys R Us and House of Fraser have suffered high profile insolvencies this year and others like Debenhams and Marks & Spencer have been forced into an aggressive program of store closures.
In fact The Centre for Retail Research confirms that 41 high street names have entered insolvency so far in 2018… and it won’t end there.
Now we realise that not everybody deals directly with these big high street brands but the likelihood is the chain of supply will work it’s way to your clients and suppliers in some way and will they be forced to pass on their pain to some degree ?
The question is, what can you do to avoid being a victim in these trying times.
The answer is simple, keep doing your diligence.
Regular readers will know that we often speak about employing good checking processes and systems into your credit control procedures. In these trying times, let’s quickly revisit them.
1.Conduct REGULAR credit checks on your client and suppliers.
Check for any adverse profit warnings, reduced credit scores and credit limits. All of these are indicators that the reference agencies and regulators are concerned.
2. Reference Companies House and other business databases.
Check your existing and new information with the databases. Have new businesses been set up by the same directors ? Does this point to an imminent change in the business ?
3. Do your diligence on the internet.
The internet is a great source of news and notices. If there are rumblings of troubles and insolvencies on the horizon, it’s better to be forewarned so you can act first, not last.
Now we’re not saying that by you conducting the correct diligence, the rate of company insolvencies will fall, far from it.
What we are saying is that in these days of companies closing, entering insolvency and then ‘pheonix-ing’ from the flames overnight into another business, you are better forewarned.
For 2018 has definitely shown us that your leopard can indeed change it’s spots.
If you would like to learn more about the diligence, credit control processes and methods to improve overall cash flow in your business check out our other News Blogsor attend our Seminar, that is taking place as part of Leeds Biz Week.