Don’t let Christmas shut down your cash flow
12/12/2016 / Comments 0
Christmas draws closer and we all look forward to some festive cheer (or some of us do), but, unfortunately, December brings with it its own set of challenges for many small business owners when it comes to getting paid. For many, cash flow becomes severely stretched over the holiday period, causing some detrimental effects.
However, tackling the issue head on and stepping up credit management procedures will help to start the New Year in a stronger position.
To help your business keep its cash flowing this Christmas, here’s 6 tips to help you get paid on time:
Some of your customers may have a shut down period over Christmas. This is more common with certain industries and planning around this can ensure you don’t risk payment delays. Make sure you’re aware of your key customers’ Christmas trading hours to get the most from collections activity. Also, avoid raising invoices that are due to be paid on a bank holiday as this is likely to cause delays. If you have payments that are due during close-down periods you could attempt to negotiate earlier payment dates or offer early-settlement discounts to encourage early payment. It’s also important to plan and budget your own expenditure over this period because payment terms are likely to be disrupted over December and January.
Get the timing right
Make sure you invoice promptly and accurately as soon as you have delivered the product or service. This is particularly important at Christmas time when key staff may be taking extra holiday. Any delays or mistakes you make when invoicing will give your customer an excuse to stall payment. Here are 10 common invoicing mistakes to help avoid disputes. It’s also important to make sure you follow the initial invoice up with a courtesy call to check your customers’ plans for payment. This is the perfect time for your customer to explain that they are going on holiday or the office will be on shut down and you can make alternative arrangements for payment.
It’s important to be persistent to remain at the front of the queue for payment especially over the Christmas period where your customers’ resources may be even more stretched. Keep in regular contact via phone and email. Take a look at our timeline to getting paid for a handy guide to how you should keep up contact when chasing payment. If you do this well, often a customer will pay the invoice for no other reason than to stop receiving your calls and reminders.
Take action now
If you have debts on your ledger that are already outstanding, take action on them now. If you wait until the New Year your debtors will have other pressures and you may find yourself slipping to the bottom of the queue for payment. Outsourcing the debt to a collections agency could give your customers that extra push and encourage them to pay up. Likewise, outsourcing debt recovery can assist when your own internal resources are stretched over the festive season.
Practice what you preach
Don’t let the Christmas period cause you to fall behind on your own payments. The last thing you want is to start the New Year with debts that could have been avoided. Seeking alternative cash flow solutions can help to bridge the gap between providing a service or supplying a product and being paid, which is typically even longer during the Christmas period. Invoice finance allows you to access up to 90% of your sales ledger value within 24 hours of an invoice being raised so you can keep on top of your own payments and start the New Year on the right foot.
Reflect on your efforts
As the year comes to an end, this is a great time to reflect on your work over the last 12 months and see what you could have done better. Use the quiet period to review your credit control performance and evaluate your procedures. Is there room for improvement? Visit our credit control tips section to check that your business is doing all it can at each stage of the order-to-collections process to get paid. You could also use this time to review your terms and conditions, ensuring that they are up to date and that they include reference to interest terms.
If you have outstanding debts, we could help. We work on a ‘no win, no fee’ basis. To find out how much it would cost should we successfully recover your unpaid invoice, contact our team on 0800 9774848, email firstname.lastname@example.org or get a quote today.