05 Apr How do I stay of the top of money owed to my business as the economy takes a downturn?
The main purpose of any business is to make a profit. In any downturn as work becomes scarcer, there is a temptation to lower the price you charge in order to maximise your share of the dwindling demand. This can become a race to the bottom; you need to consider whether you are competing on the right basis, especially for a long-term sustainable business.
As Aldo Gucci, the fashion designer said: “Quality is remembered long after the price is forgotten.”
You need to reframe your business so that you are concentrating on providing a quality service with value-added and not just a cheap, lowest price wins offering. Otherwise, longer-term, you are more and more susceptible to minuscule changes in the market.
As we look into the future, the next 3-6 months seems very uncertain for many of us, and many businesses have gone into survival mode as they try to prepare themselves for the storm which has for the first time affected the global economy worldwide almost instantaneously.
Longer-term advice includes ensuring you have a proper electronic accounting system – these are so easy to use from anywhere there is no excuse for you now not to have clear records of money you owe and invoices you have outstanding. You should ensure you have terms of business and have agreed when you will be paid for the work done. Finally, know who you are contracting with and understand legal entities such as limited companies and sole traders. We urge you to seek advice if you are unsure as it can be a costly mistake.
Here are my top 10 tips for you in these challenging times to stay on top of your money in the short term:-
- Issue the invoice as soon as you have done the work, follow up in the next 24/48 hours with confirmation it has been received and there are no issues being raised with the work.
- Produce a weekly aged creditors/receivables report to highlight who owes you money.
- From that report, call and follow up by email anyone who is overdue and get a confirmed payment date. If they are having an issue making the payment, try to agree to repayment by instalments.
- Contact anyone who is due to pay in the next few days to confirm the date and amount you will be paid.
- If an account is in arrears and beyond terms, when calling, always get debtors to take some action – and set a deadline of what has to be done by when.
- Where you know you are going to be encountering a cash-flow problem, talk to your suppliers and agree time to pay if necessary.
- Keep a close eye on your costs and outgoings to ensure you can maximise the amount of cash you have within the business, try to retain this money where you can for as long as possible.
- Remember to thank those who pay you on time, sounds simple and is, but stands you in good stead with the client.
- Be persistent but always remain polite, he who shouts loudest often gets paid first!
- Take expert advice either when the deadline set by you has passed or where the debtor goes quiet and be prepared to take action.
As debt recovery and insolvency experts, I and my team at Professional Legal Collections are happy to help. We offer a range of specialist services from Credit Control and debtor management, issuing letters before action and the legal process where necessary to get the rightful money paid to you. Contact us for a no-obligation conversation.
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