You know what it is like when you have had a great weekend.
Yesterday my wife said to me fancy going to the Pilot which is our local, at 4 30. I thought it a bit early as we are going out for dinner at 7 30, well I did not like to argue.
Wow what a surprise, we had had my Birthday meal on Wednesday, so it came as a complete shock, to find 50 people singing happy birthday when we walked in and wow again what amazing gifts and cards, totally unexpected.
Sorry to go off track, so it is Monday morning and you are feeling great and then you are greeted with payment requests from your suppliers and you are thinking it’s not even 30 days and then you are looking at what you are owed and you see
Over 65% of your Debtor ledger is 30 days or older, with some clients, proudly using you as their free banking facility.
Yes they are using the money they should have paid you, to pay someone else.
Three things you can do about it.
Improve on your debt collection, I do have a guide on this, you are welcome to call me and I will send you a copy.
At a minimum you should be doing this.
Three days after an invoice is sent out, a phone call should be made confirming.
A) That it is correct
B) Asking the accounts department, on what date you can expect payment (then following up on this).
NB. For Companies that work on Applications for Payment, we can arrange finance for your Uncertified Applications, quickly and easily.
When a client, gives your account department one of the 20 top used excuses on why they need another 30 days, not to pay your bill so they can use the funds elsewhere ( you would not begrudge the Director’s family holiday, by not paying what they owe you, would you?).
Why not ask your accounts department, to politely suggest that if they are having short term Cashflow problems, why not try a Finance Broker, there is a firm called Ringrose and Co who specialise in finding Businesses Funds, why not call Mark Smillie on 0800 612 5364.
Well if we cannot secure funding for them in 5 days, why on Earth are you financing them?
I have been doing this for over 20 years and have an address book of funders to die for.
One of the biggest dangers to any business is getting hit by a bad debt; in most cases this could have been avoided.
If a client goes into Liquidation owing you £ 50 or a £100k
It is just like someone taking out £50 to a £100k from your account that day, with no warning or approval from you, how upset would you be? And what are the potential consequences to your company?
How could you lessen the risk of that happening?
A) Tell your accounts department, they are not allowed to sanction any debt going beyond 45 or 60 days. They have to go to a Director for formal approval.
This will automatically have an impact, because the client will not bother asking again, he will know he can stretch you to 45 or 60 days, but then after that it will be a hassle.
B) If you are approached even by your oldest client, for a delay in payment of an amount of money that you could not easily afford to write off today, this is what you should do.
In the nicest way you tell them, that any debt over a certain level has to go through an independent company for their recommendation.
I have been a Partner at a firm of Licensed Insolvency Practitioners, we would take a look at the company and find out if it is possible to raise finance, look at the Creditor pressure that they are under and come back to you normally within 48 hours with some recommendations for you to consider, putting your interest first, which of course many professionals are not allowed to do.
Well that’s it for another week, Clare and I are going to enjoy this wonderful sunny Sunday.