“Yes, of course, I’ll pay you… I am SO sorry that the invoice is overdue.
“We’re just waiting for a bit of money to come in from our own clients, then you’re first on our list… Again, I apologise…:”
Most companies have had that conversation with a client at one time or another…
…And even at the best of times, it can cause you enormous financial stress when your clients don’t pay on time. Your business can’t function without a regular flow of income.
Right now, as we emerge from lockdown into one of the greatest financial crises of our lifetime, the result could be very difficult for you indeed.
That’s why watching your clients like hawks to make sure they are paying on time has to be a top priority for your business at the moment.
You see, over the past few weeks, we’ve been talking about businesses that are growing nicely – and even soaring – as we come out of lockdown.
You may feel pretty euphoric if you’re doing well right now, despite the difficult trading conditions all around us.
Work is streaming in… On paper at least, you’ve never been this profitable… Your biggest challenge is serving all your new clients smoothly.
But the same may not be true for your clients.
Even as they sign up for your services, they may be experiencing tough times.
If you’re selling to other businesses, their own customers may be taking longer to pay than usual – or abandoning them in droves. If they’ve been shut down during lockdown, they may have significant lost income to make up for and staff issues to deal with.
Individuals may similarly have experienced drastic cuts in their income or may experience unemployment once the furlough scheme comes to an end – or economic reality bites their employers.
In other words, just because you’re doing well doesn’t mean your client or customers aren’t failing. Or that they won’t fail several months down the line.
And when that’s the case, that puts your own business in mortal danger – no matter how well you seem to be doing on paper.
If your clients can’t pay you – or even if they take too long to pay you – you can run out of money yourself, which spells the end of your business.
Now, given the current economic climate, you may not be as discriminating as you might otherwise have been, taking on clients.
I mean, each one is critical right now, correct?
And if you stand to earn a particularly lucrative contract, your guard might be lower than usual too. You can get swept up in the euphoria and the promise of big profits…
….And you may not realise until too late that you’re taking on risky new clients or customers.
Unfortunately, a traditional credit check may not be that useful right now. Those figures are usually several months old and given how quickly the economic conditions shifted once the Coronavirus crisis hit, they may not reflect your potential clients’ real financial situation right now.
That’s why, beyond using your common sense and not taking on clients who your gut tells you to avoid, you need to institute really tight credit control right now.
That means being extremely efficient with your billing and with follow-up. And making sure that your clients do not owe you money beyond the agreed time-frame, because right now, clients that are late payers are a bad bet….
…And could end up throwing your own company into financial turmoil.
The same goes for your suppliers. Just because you use them does not mean that they’re thriving right now!
And can you really afford to depend on a supplier who is experiencing financial difficulties… who may not be completely reliable any more… whose financial difficulties can impact the service you provide your clients?
Definitely not.
Staying on top of billing and payments can be time-consuming and to do it well, you need very clear credit control processes. You also need the manpower to follow those processes to the letter, each time!
That’s part of the service we provide when we manage your company’s finances for you.
Not only do we manage your cash flow – looking at it every single day, to spot any issues far in advance and deal with them, so you never run out of money and can plan your expenditure properly…
…But we also institute our turnkey credit control processes, so that you stay on top of your incoming payments at all times.
Of course, that’s just part of the many financial systems and processes we put in place to bring your financial management up to world-class standards…
…And the help we give you understanding your numbers and making better financial decisions based on them.
To discuss how we can help you professionalise your financial management, hit ‘reply’ to this email or call us on 01279 647 447 today.
You’re growing during this difficult time – let’s do everything necessary to make sure that nothing gets in the way.
