Here’s the scenario: you know you should be profitable. You’ve done the maths and your income should easily cover your expenses. And yet, you never seem to have enough cash.
You muddle through, chasing late payments, and believing that how customers pay you is outside of your control. You continually spend money on credit control – a band-aid for a wound that won’t heal without investigating and addressing the root cause.
Late payments are a symptom, not a cause
Many businesses become convinced that the problem is poorly paying customers. But actually, that’s the symptom.
The good news is that the real problem is within your control. It’s time to revisit your credit policy and the processes that back it up.
Invest in your most valuable asset: cash
Cash is so critical to the success of a business – even a highly profitable one – that investing in getting a handle on your credit management should be top of your agenda.
At Confident Cashflow, we work with businesses to review and strengthen 5 pillars which together help create, implement and monitor a healthy credit policy. In turn, this strengthens your business and gives you confidence to invest and grow.
To find out more, book your FREE discovery call and find out what you can be doing to strengthen your credit management approach.
Common misconceptions about credit
It’s common for business owners to believe late payment is the weapon of larger players and that, as a small business or SME, they can’t influence the policies of industry giants.
Why is this wrong?
Because out of the 6 million businesses in the UK, only 8,000 meet the government definition of a ‘large business’ and only 36,000 are classified as medium sized. That means well over 5 million businesses are small and you are therefore far more likely to be owed money by one of them.
Many smaller businesses might believe they don’t need a credit policy until they reach a certain turnover milestone. This is wrong. You can never be too small to set best practice foundation upon which to grow your business.
It's not about being bigger, it’s about being thorough.
By spending some time and investing in best practice advice and guidance, you can ensure your credit policy serves your business. A robust policy will remove the problem of late payment as well as assisting with decision making when it comes to vetting new clients.
Contrary to popular belief, profitability does not necessarily equal a healthy, cash-rich business.
Many of my clients have looked fantastic on paper but, in reality, they do not have the money to hand to cover their bills. This is most likely down to their clients paying them late; an issue that a robust credit policy can solve easily.
Time for a change?
We can help you identify what your credit policy needs to contain by carrying out a 5 Pillars Review.
It’s time to say goodbye to your money spending more time in your customer’s bank account. Bear in mind that, for a business with a turnover of £5million, one extra day’s cash equates to £13,000.
Why do I need to review the 5 pillars of confident cashflow?
If you find you are frequently let down when it comes to customer payments, there is a good chance that something is missing from your credit policy. All you need to do is find that gap.
Our 5 pillars review is for you if:
- Money is slow to reach you, even though you believe you have clear payment terms
- You feel you spend too much time chasing people for debts but not getting to the root of why they are late payers
- You are worried that some of your customers might not fit your risk profile
- You are struggling to invest and grow your business because you are not cash-rich
Instead of wishing and hoping that your clients will become better payers, why not address the root cause of these problems with a full review of all 5 pillars of credit management?
What are the 5 Pillars of Confident Cashflow?
Our 5 Pillars are a framework which enables us to assess all the activities that relate to the way you deal with cash and credit.
With the clarity that the review brings, we can create and document your best practice credit policy as well as the forms, documents and procedures that sit beneath it.
Revising your credit policy (or implementing one for the first time) requires a thorough audit of the way your business works and success will depend on having total buy in from everyone who plays a part in the decision-making process.
What we can do for you
- Carry out a 5 Pillars of Confident Cashflow Review
- Assist you with removing the causes of late payments before they occur
- Deliver our 5 Pillars of Confident Cashflow Project where we work with you to implement the recommendations from our review
- Design policies which remove the risk of credit management worries
- Review/Update or Create Terms and Conditions of Sale to set clear expectations each and every time you contract for business
- Deliver a Power Hour where we advise on strategies to overcome cash related challenges which are troubling your business
If you’re not sure what help you need, why not take advantage of our FREE discovery call