Here’s an interesting article from a leading firm of Farnborough accountants…
One of the mistakes I see business owners make that kills expansionis the lack of attention they give to getting money for what they do.
For instance, it’s not uncommon for firms not to invoice clients immediately. Instead a few days pass and infrequently it can be well over a week before an invoice goes out.
Then the payment conditions of the invoice that gets sent out may be 30 days which is, in our estimation, too long to wait to get payment, if you are a home business trying to grow.
Next we frequently find that there is minimal credit control systems in place to get that cash in before the 30 days is up. In numerous cases it’s just accepted that it’s impossible to get money in by that time!
And finally, many small businesses don’t have a credit checking system in place when first giving clients credit. This in turn leads to raising the risk of not getting paid at all.
As you can see it is not any wonder some businesses struggle to get paid for the work they do.
To stop this situation follow these steps
- As soon as you make a sale ensure you have got systems in place to distibute an invoice and get it out that same day.
- Set your payment terms to up to 14 days. Even if the competition are giving 30 days our advice is “let them!” It’s no good being in business if you are unable to stay in business!
- Put credit control systems in place that are courteous but point out that your payment terms are not negotiable. When doing this tell your customers ‘WHY ‘ these terms are important. And major reasons include they permit you to give the level of service you provide and they permit you to maintain your keen pricing. If people do not like it let them go. The other way to look at it is you cannot afford to act as a ‘bank ‘ and be money starved if you want to grow your business.
- And finally, install a credit checking system which will highlight any problem customers or clients well ahead.
John Cleden is the writer of many business articles and is a tax accountant in Farnborough and also heads up a top firm of accountants in Farnborough. Their address is J C S Associates 121 Albert Street, Fleet GU51 3SR, United Kingdom 01252 812345