Are you chasing the wrong business?
When times are tough, it can be tempting to take on all new orders that come your way. After all, new business leads to more money, which leads to business growth, right?
Sadly, this isn’t always the case.
By constantly taking on any new business you come across you could be leaving your business vulnerable to late paying customers and therefore cash flow issues.
According to Bacs Payment Schemes Limited, UK SMEs are owed £14.2 billion in late payments.
As a result SMEs are facing a total bill of £2.16 billion to chase overdue invoices and a number of cash flow issues.
Of those facing late payments, nearly a third (32%) say that overdue invoice settlement forces them to pay their own suppliers late.
Therefore, when winning new business, it’s vital it’s the right business.
How do you know if it’s the right business?
Taking a step back and performing credit checks to analyse whether a new customer is creditworthy, can help save you valuable time and money as chasing late payers can become an arduous, resource-draining process.
Whilst making the decision to decline a new order is tough, if the potential new client cannot be relied on to pay on time then it may be the necessary action to take.
It is vital that this philosophy of only dealing with businesses that will deliver when it comes to payment is one that runs right the way through your company and not just the credit control team.
Your sales staff should not be only incentivised for getting sales; they should be encouraged to get the right sales from reliable customers.
If this is executed correctly and in coordination with healthy credit control procedures, such as making it easy for customers to pay you on time, then it is more likely that new business will lead to more money, which will lead to business growth.