Five tips to manage your cashflow and keep getting paid
Cashflow is the life blood of every business – but even more so now, with every business affected by the coronavirus pandemic.
Business advice mentor Jackie Cooper, of DMU’s Enterprise and Business Services team talks to Julie Randall from business consultancy Incrementi to find out what steps you can take to protect yourself and continue to get paid.
“Cashflow is more important than ever,” says Jackie. “We have spoken to businesses cross Leicestershire and carried out surveys and cashflow has been top of mind for them. At the same time, I think we have to be human and know how difficult it is for businesses right now – but there are ways to manage your cash flow, get paid and develop a better relationship with your clients.”
Cover the basics
This is going to sound basic, but remember to set up an agreement with whoever you are doing business with and send the invoice. Believe it or not, so many people do not even send invoices or forget, or send it late and that causes all kinds of problems and delays. When you are going to be entering into business with someone, you need to ensure that you have got some form of agreement in writing. It can be an email trail, but ideally it’s a set of terms and conditions. If anything does go wrong, one of the first questions you will be asked is to produce your agreement.
If you are going to be working with someone and giving them credit, I always recommend you do a credit check in the first place. They can be a very good guide and help you find out more about the company. A bit of due diligence is always worthwhile. Set up a process
I recommend having a process in place for how you invoice and collect payments. So for instance if your T&Cs say that you expect payment 30 days after receipt of the invoice and you haven’t had payment by day 32, you communicate and ask – in a nice way – how they plan to pay. A gentle, friendly reminder.
People do forget things – in my experience, probably 95 times out of 100 most people who do not pay on time have a genuine reason.
However if this does not work, I would move to a seven day process. Look to speak to the person you dealt and the account department. Be open about going into some kind of payment plan. Get a payment date from them. If they break the next payment date, you need to be back onto them straight away. It’s fair to say most people, when met with persistence and firmness, will listen as opposed to avoiding the issue. Don’t be fobbed off
Sometimes, in a very few cases, people will look to avoid payment. There are some classic red flags that this will happen – for example, if they start suddenly complaining about an issue when you ask for payment. If there was a genuine issue, you wouldn’t wait until the invoice came to complain.
If this does not work, I would look to work to a seven-day process after that.Be Human
If there’s a genuine reason why they can’t pay it right now, listen. People are struggling and many businesses have seen a huge impact on trade – some may not have been able to trade. You need to work with them to get the outcome for both of you. I would be talking to them regularly, and being lenient – for example, while you can choose to add on late payment fees and you would be entitled to do so, I would not advise doing that on this occasion. When this is over your relationships with clients will be remembered.
However if this is a pattern with a particular client, I would suggest they could be using coronavirus as an excuse. Protect Yourself
Be strict with keeping notes. If you are sending an email, send it with a read receipt. If you are writing to them, send it via recorded or special delivery. You have to prove that you have taken the necessary steps to chase the debt. If you have conversations, take notes and save them with the date and time on them.
Don’t leave it. It’s far less likely for your debtor to pick up the telephone and talk to you the longer it goes on. They are less likely to pay you unless you nudge them along. He who shouts loudest will get paid first, unfortunately. NEED HELP?
Contact Jackie Cooper at DMU Enterprise and Business Services, or Julie at Julie@incrementi.co.uk
Posted on: Monday 18 May 2020