News

For many small businesses, effectively managing customers and how they pay can mean the difference between boom and bust. Here are a few quick tips to help you stay sharp:

Do your homework

It pays to learn as much as you can about potential customers and whether they are credit-worthy. Just in case, it's a good idea to work out what a late or non-payment would mean for your business, and have a backup plan in place. Do you have the cash reserves, overdraft or credit facilities to cover a bad debt? If not, credit insurance can provide peace of mind.

Do your part

It is your responsibility to make sure orders are on time and complete. Failing to do this may give the customer an excuse not to pay.

Be clear and be tough

Some small business owners let a big sale or new contract blind them from ensuring prompt payment. Be clear and negotiate hard on payment terms. If you're in a longer cycle business, aim to get progress payments. Don't accept getting paid when the customer gets paid. You shouldn't feel bad for charging interest on late payments.

Reward paying early

It can be a smart move to incentivise early payment. Offering a small discount or free delivery to customers who pay early can help to strengthen the business relationship.

Promote paying quickly

Encouraging fast payment means the money is in your bank account within a few hours. It makes sense to avoid credit card payments which can be time consuming and expensive.

What goes around comes around

Make sure your suppliers also receive timely payment from you. If you have a track record of paying invoices on time, suppliers are more likely to be supportive if times are tough.

Adapted from: http://www.telegraph.co.uk/sponsored/business/sme-home/business-tips/10870488/cashflow-tips.html