The Late Payment Problem

This effects every small business and it will for many years to come. Don’t wait for government to do anything, they will just talk about what they are going to do, one day! Don’t imagine big business will do anything, that is about as likely as believing that one day pigs will fly. Big business has got used to using your delayed payments to manage their cash flow. Depressing isn't it?

However, you don’t to live with it, you can do things about it, such as:

  • First, make certain you customer understands and, more importantly, agrees your terms of trade.

  • Preferably, make your payment terms 14 days. This is not easy, you will have to be brave, but when you are, you will be surprised how often you get it agreed. Payment may not come in 14 days, but it will come in earlier than before.

  • As soon as your goods or service are provided raise the invoice!

  • Then make certain is it sent, immediately.

You now need your customer to keep to the agreed terms, therefore:

  • Seven days after delivery of the goods, ring your customer, ask if he is happy, then ask if he has the invoice. If he hasn’t email it to him.

  • Now ask if it has been passed to accounts for payment? When the reply is, yes, ask to be put through to accounts.

  • Be friendly when speaking to accounts, remember you are not asking for money, just checking that they have the invoice and it is in for payment.

By using this method you are not debt chasing, to your customer you are a good supplier, checking everything is to their satisfaction, while the accounts department see you as an easy supplier, not screaming at them for payment, do this in a friendly manner and they will like you. This means that they will want to help you and you should get paid early.

The rule is communication, the lack of which leads to most of the world’s problems.

Further ways to guarantee your cash flow are:

  • Set up a monthly subscription for your services, your money should then come in regularly.

  • Get payment in advance.

  • The easiest way this to do this is through a web site, which is how Amazon has grown since it started.

If you want help to get this money in, that's what we do at Think Cash!

Tony Dalton is a well respected business Mentor covering the Midlands and Warwickshire. Click here for more information on Tony and "Think Cash!"

#cashflowcrisis #cashflow #businessadvice #toughttimesforbusiness

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