8 Top Tips for Improving Your Cash Flow
According to Bacs, almost half of the UK’s SMEs are being paid late.
The average late payment debt now stands at £32,185, which equates to £26.3 billion across the 47% of SMEs that say customers and clients stray beyond agreed payment terms. How can you reel in the late payers? And when should you seek legal advice?
In a recent UK-wide study, it was found that one in six small businesses say they are ‘very’ concerned about managing cash flow effectively over the next 12 months. It is estimated that small firms waste up to 16 weeks per annum chasing invoices, time which could have been invested elsewhere, and ultimately has a knock-on effect on business growth and profitability.
Managing Your Cash Flow Effectively
Here are our eight top tips to help you to reduce debt and improve your payment terms:
- Good communication is key
Build good working relationships with your customers and keep in mind that the best time to negotiate for better terms is when you don’t have an urgent need for them.
- Send invoices promptly and make your payment terms clear
Send out all invoices promptly and make customers aware of the consequences of not paying on time. Make your payment terms clear, or add a payment due by date in your communications.
- Ensure customer information is kept up to date
Make sure all customer information is up to date so they can be contacted easily and, if relevant, do credit checks on them. There are various credit check companies and whilst there is an initial cost, this could save you thousands in the long term.
- Record as much contact information as you can
The more contact information you can get the easier it will be to contact them and recover the money owed to you, especially if outsourced to a debt recovery law firm.
- Record due payments and send reminders
Make sure you record when payments are due and send reminders a couple of days prior to this date. A quick, timely email may be sufficient to remind customers that their payment is due.
- Make sure you know who to contact
When you are dealing with debt, find out who is responsible for deciding payment terms and then reach out directly to that person.
- Be prepared to outsource debt recovery
If payment is still not received after a period of time, or if the customer refuses to cooperate, instruct a debt recovery law firm. A debt recovery law firm is well placed to take several steps, including a letter before action and further legal action if necessary, to help you retrieve credit owed to you.
- Lengthen payment terms with vendors and suppliers
One of the most effective ways to improve your cash flow is to lengthen your payment terms with vendors and suppliers. If you’re on 30 days right now, try 60 or even 90 days. With good communication comes good relationships, therefore try to negotiate payment terms and by doing so, improve your cash flow.
Our Debt Recovery Service
We provide an efficient, cost effective debt recovery service to help you recover the maximum amount of the debt quickly, at minimum cost. Our work prior to issuing court proceedings is largely done on a ‘no collection no fee’ basis, designed to save you time and money from the outset.
A passion for what they do and how they go about doing it. Very transparent in dealing with clients. They set the highest of standards and consistently deliver positive outcomes for clients.
- Legal 500 | Debt Recovery Team
If you're struggling to collect business debts and would like to discuss how our debt recovery team can help you to improve your cash flow, please contact Nick Roberts for a free phone consultation on 0117 314 5282, or make an online enquiry below.