Many small firms are having to wait far too long to be paid by their clients, with many small firms having to threaten legal action before they get paid. The impact on small businesses and small business owners is so big that the issue was even mentioned in The Queen’s Speech last week. The new government is promising a conciliation service, to save small business the extra costs of legal action and court fees.
But Poynton based credit control expert Rachael Chiverton believes that for many small businesses, delayed payments and even court action could easily be avoided right now.
“It’s great that the government are acknowledging this problem” explains Rachael, “but the proposed conciliation service could just be like locking the stable door after the horse has bolted. Where the government could really help is by promoting good practice amongst small businesses before they ever have a problem”.
“I spend all of my time helping businesses build a robust credit control process, and that begins even before you have even spoken to the client for e first time. For most businesses bad debt becomes a problem when the invoice is already late, but if the government were to help businesses get their processes right in the first place, over 80% of these problems could be avoided. Some businesses have their systems in place right now, but many more businesses could – and it doesn’t even need to cost them much to set up”.
“The problem often isn’t the bad debt, that’s a symptom but not the cause. The real cause is often a lack of communication between the supplier and their client, particularly payment terms not being communicated early enough.”.
“Small firms may not recognise that if they are dealing with a larger company, their contact is probably not the person who will ultimately write a cheque. In fact the person they are dealing with is quite possibly unaware of their firm’s terms and conditions at all.”
Rachael has put together a free guide for small businesses to help them get their systems in place.
For more information visit www.rachaelchiverton.co.uk