Late Payment Risks
31st May 2017
Late payments can also be a big problem for startup businesses. In fact, more than half of Britain’s SMEs are currently waiting for overdue bills to be settled, with an estimated £44.6bn in late payments outstanding.
But what is your contingency plan if your payments are late, reduced or worse still, don’t arrive? When you can change all of these parameters and get an immediate review of your business model and forecast, then you have a really good chance of assessing all of the risks associated with your new business idea in a transparent, logical way. From there, you have your targets planned just in case that scenario presents itself.
Be prepared to confront the problem of late payments as soon as they arise. Leaving things to escalate is not an option for a startup as cash flow is a silent killer and late payments can contribute to this. Here are some quick fire tips to get you started:
- Know your customers – run credit checks on new customers first.
- Be clear on your payment terms from the outset and down tools if you have to. Stand strong and try to get a signed agreement on your terms.
- Avoid cheques and encourage customers to pay using electronic bank transfers or a direct debit.
- Always chase unpaid bills immediately and keep chasing until they are settled. Do not offer further credit while bills remain unpaid.
- Monitor your cash flow using advanced technology and get your forecasts accurate from the outset.
Work hard to build strong relationships with clients.
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