Give the current state of the market and the difficulties it faces, SME’s are finding late payment becoming a common occurrence from their Clients. Previous sources of cash that SME’s could rely on, such as bank loans, have seemingly dried up as purse strings are tightened by lenders and it is not an uncommon theme for small business owners to use their own credit cards to support their business.
However, by making some small adjustments to their credit control procedures SME’s can help their own business to deal with these issues. Putting the right systems into place can help to support the cashflow of the company. Simple changes to existing systems such as the length of time credit is available to a customer, everyday credit control, debt collection, dealing with companies and safeguarding against bad debt can all have a positive impact.
Their is a greater need than ever for companies to be ensuring that their debt collection processes are in place and not allowing overdue invoices to build up and accrue while waiting for payment.
One useful method to help protect against bad debt is to make use of company credit checks, from a credit reference agency such as Creditusre, which can show if a company has a poor credit history, judgements and overdue accounts. By checking the company before you do business with them you can make an informed choice about offering credit.
Another common trend that is currently doing the rounds is larger companies demanding extended payment terms from SME’s, in particular in the construction and recruitment sectors. SME’s need to stay strong and not allow companies to dictate to them when they will be paid. The impact that extended terms can have on a business could be detrimental to the business itself.
Ultimately cashflow is as much about making sure a business is paid for the goods or services it has provided than anything else. A strong cashflow is key to ensuring the continued operation of a company
