One of the most tiresome aspects of running a Small Business in the UK is chasing unpaid invoices. Over 50% of small business owners have reported that it costs them time and money trying to get paid small Business paid on time.
Credit control is often regarded as a time consuming and resource draining for any small business. Countless hours, even days can be spent chasing payment of unpaid invoices. Not only is the chore of chasing down unpaid invoices a energy and time sapping exercise, but it is also demoralising at best. It takes key personnel away from more important tasks such as nurturing and developing the business.
Not having strict Small Business credit control policies can seriously damage the well being of a Business.
From reduced cash flow to reduced staff morale, it is undeniable that unpredictable cash flow affects small businesses in all manner of ways. It can also render them unable to invest and finance growth.
The positive news though is that to avoid such scenarios can be simpler than you think. In just a few minutes you may well identify a weakness within your Small Business credit control procedures. If these 7 tips are implemented, it can help your small business become more profitable over time.
Small Business Debt Collection Experts at leading Commercial Debt Collection firm Federal Management have kindly provided us with these handy tips to keep your Small Businesses credit control in check.
1. Monitor your sales ledger
This is not as time consuming as you may think. Just a quick5 minutes every morning to review your sales ledger is an effective way of identifying which customers are near or have missed a payment deadline.
2. Phone your clients
Maintaining personal relationship with clients can help keep them aware of pending credit periods. It also helps you to manage them as a customer and can result in more business. Keeping clear channels of communication open is essential in all aspects of running a small business.
3. Revise invoice templates
Are your invoices sending clear messages? It is essential that key information such as terms for payment, credit terms, acceptable payment methods etc are prominently displayed to avoid confusion.
4. Be mindful of existing customers status
You may be credit check new customers but it is also important to be aware of existing customers getting into financial difficulties. A company’s credit status can change very quickly so it is imperative you do this using an online credit score service.
5. Use credit circles
A great option to assess the financial credibility of Business customers is to be a member of a recognised credit circle. In these forums you can analyse important curator trends with other companies. Different trade and industry circles can supply advisory information about potential new customers.
6. Set payment deadlines
If your Business has an array of older unpaid invoices that have taken up way too much time, set a payment deadline. This will make it clear that you cannot simply act as a free overdraft for their business. This is the most important tip of all. Thousands of SME’s go to the wall every year by not taking positive steps to ensure they get paid.
7. Instruct a debt collection agency.
As stated, chasing Small Business unpaid invoices is stressful, time consuming and resource draining. Why not let Professional specialists help? Specialist Small Business Debt Collection Agencies collect millions of pounds every year in unpaid invoices. For a small fraction of what is owed, you can have your debt collected in a fraction of the time and minimise the stress and loss of time unpaid invoices cause.
Commercial Debt Collection Agencies are more appropriate for B2B Debts. For debts owed from an individual, you will need a Personal Debt Collection Agency.
Furthermore, if your Customer is based abroad, hiring an International Debt Collection specialist maybe advantageous.
If you need help recovering an Unpaid Business Debt, visit Federal Management today for swift advice and assistance.
Small Business Credit Control can be easy or as hard as you want it to be. It is essential to the well being of your Business though so having efficient and stringent policies will only serve to keep cash flow optimum.