Steps you can take to protect your cashflow
In a tough economic climate like now, every business faces a growing risk of not being paid for their goods or services - and each one will have its own ways of reducing it.
Here, we list some of the most effective techniques businesses are using to keep cash flowing in:
Publish your terms and conditions: include your payment terms on your invoices, specifying the number of days within which you require payment. This ensures that customers cannot claim to have misunderstood your terms if they exceed the payment period.
Challenge reasons not to pay: if you believe that a customer is questioning service levels or alleging contractual breaches simply to slow down payment, don't be shy of asking for proof of their assertions. Unless this customer's business is too important to risk losing, don't hold back from bringing things to a head to accelerate payment. Consider enforcing tougher payment terms on other business with them while the situation is unresolved.
Look out for late payers: it is inevitable that some customers will delay payment to improve their own cashflow; monitor such delays, and be prepared to pursue late payers promptly in line with your stated terms and conditions.
Assert your rights of ownership: remember, until you have been paid, any products you sell are still legally yours. This means two things: you can demand their return and seek to sell them elsewhere; and, should your customer go out of business, you can claim the goods as yours.
Use credit reports: it is easy and comparatively inexpensive to commission regular reports on your most important customers, to check how they are performing across a range of measurements. If their credit-worthiness alters negatively, be quick to review the credit terms you offer them.
Monitor customer behaviour: the sudden disappearance of staff, the introduction of schemes like factoring, invoice discounting and slower payment can be signs that a customer is experiencing financial difficulty. Be prepared to take action to help you avoid being left unpaid should the business fail.
These are all steps that businesses have found helpful in ensuring a stable cashflow. Above all, though, consider taking legal advice at a very early stage in proceedings - timely, effective advice can pay dividends in the future by saving time, expense and stress further in the process if your customer is in difficulties.
Call Natasha Bliss on 0117 9290451 or email nbliss@metcalfes.co.uk for further information.
This press release summarises the law on issues which we believe may be of interest to your business. It is not a comprehensive review of the subjects and accordingly is published without responsibility for loss occasioned to any person(s) acting or refraining from action as a result of information published