We have released our guidance on the quick wins for business owners to ensure you can get cash back into your business. If there’s anything we’ve included in this blog that you’d like more information or help on, please do get in touch with our Bev.
Empathy is paramount
Never take your eye off your cash flow because having cash flowing will give you peace of mind for the next few months.
With your oxygen mask on remember now is not the time to stop your credit control but it is important you see things from your customers perspective. If customers are late paying, they could be in panic mode. Get in touch with them, especially if they are a good customer. You should talk to them and give choices about how you get paid.
If, like us, you’re committed to running your business with heart and linked to your core purpose then you can tweak your processes for customers who are struggling. But that doesn’t mean you will give anyone an excuse NOT to pay because heart must be combined with backbone.
Process reviews and improvements
You should be sending out invoices as soon as you can raise them; maybe you should move them a little (for example if you send on the last working day of the month how about moving a few days before that to ensure you hit end of month payment runs). Then there’s statements, we highly recommend automated processes so that statements are sent as soon as customers have exceeded their payment terms. It’s always essential you have shipshape credit and debt collecting processes in place however maybe now is a time to review if you usually struggle to get paid on time. A lot of debtor problems are as a result of poor processes so get best practise for your business.
Now is not the time to not look at the financial health of your potential customer; do the credit checks to ensure these businesses can pay you. Credit checks should be part of your onboarding process to see what a company’s limits and credit is like, especially if there is a big order resting on it.
Our message is clear; don’t be lenient or slow on debt collection in this current business setting. Don’t keep working for customers who don’t pay; you are running a business and you have to have cash coming in.
Understand your Business 101 cycle
There’s a massive difference in profit and cash; Profit is what you do your corporate tax on whereas cash is the oxygen you need to survive. Have you used this cycle to understand how to increase your profit, reduce your costs, improve your sales, look at potential revenue lines and ensure you avoid losing existing customers?
Now might be the time to discontinue with products that have poor margins; simply looking at the efficiency gains for your margins on products thoroughly could help you make decisions that stand your business in good stead for the long term.
And we highlight the quick wins
How we can support you
Flowcharts, scripts, processes are all useful for credit control. We can share ideas that are tailored for your business on a 1:1 basis for the quick wins like early acceptance for additional work you have completed. Updating of your price list, using automation with Xero for invoicing and statements. A review of your spending on invoices, ways you can reduce stock or improve your efficiency in operations. If this help is what you need for your business right now, we are here and have lots of tools to help you with the improvements you need.
The combination of business continuity plans and cash flow forecasting will provide so much value and give you a great foundation. You will be able to see where the tight squeezes are within your business. We can help you with these if it is something you need extra support with.
Support from the government
Automatic deferral, relaxed terms for time to pay, claims on furloughed workers are all working well. Don’t forget you can claim up to £2500 for your employees if furloughing them is the right decision for you. The self-employed income support scheme has just been released and is there for business people who may have fallen in-between the cracks of some of the alternative schemes already released. There is a lot out there to help with cash flow issues like the easy to apply for interest free government backed bank loan.
You must look at whether you can stretch out loan repayments, review the Bounce Back Scheme that has been released. It’s really great for those businesses who were not able to access the business interruption loans. Loans can be available up to 25% of business turnover. It’s interest free and reported already as a very easy application process. It’s a way of getting cash into your business right now.
Even in the current situation we find ourselves in our time remains very valuable; we hope you can see clear options for your next steps and the options available to you. Remember to pop your oxygen mask on. To watch our webinar please click here.