We all understand that not collecting payments on time has as a severe impact on your cash flow, but let's not forget also that you are effectively giving your clients, your debtors, interest-free credit, and this also has an impact on your cash flow and your profit. Whatever the size of your business - start-up, sole trader, micro business, small business or SME - the remedies are the same. Follow these four steps and you will reduce the amount of money owed to you: send out the invoice as soon as you ship the goods; call the client the day after you send out the invoice to check the invoice has been received and there are no issues with the goods or services supplied; call the client 5 days later to carry out the same checks, so that there no excuses on that front; and call the client 5 days before you expect to get paid to make sure your invoice has gone into that month's payment run. Pretty obvious really, but it is surprising how many companies are not doing that. DSO - … [Read more...]
Continual Improvement
As a small business owner wanting to grow your business you will be looking at ways to improve your business to generate more profit and cash, to free-up working capital, and to make more effective use of your own time. While there may be one-shot improvements you can make, such as outsourcing an overhead function to make a net saving, there will always be those issues where the benefits are obvious but the means of achieving them are not so clear. Continual Improvement is not just for manufacturing quality Adopting a systematic, continual improvement approach to those issues could be the answer. It used to be thought that continual improvement was about manufacturing quality, but these days, quality is seen as something that should be embedded right across a business. And likewise the continual improvement methodology can be applied to issues, right across a business, in every function, for example: improving the enquiry rate from an existing marketing budget increasing the … [Read more...]
Collecting cancellation fees
People don't like paying cancellation fees even if they are aware of them when they book their appointment, to the extent that charging a fee often results in the client going elsewhere. No easy remedies Apart from asking for a non-refundable deposit, there are no easy remedies. Charging a cancellation fee to their credit card leaves you open to the client disputing the charge and claiming a refund, the excuse being: they did not receive your service, they were not aware of your cancellation policy (even if you did tell them), and they did not authorize the charge. Avoid cancellations in the first place So, by far the best way of reducing lost revenue is to avoid the cancellations in the first place. Send the client a reminder 24 hours before the appointment either by SMS, email or phone and get a confirmation of the appointment; Ensure your staff are well trained to handle objections and secure the appointment; Survey the clients to find out why they cancel and address the … [Read more...]
Removal of Time to Pay threatens the life blood of our economy
UK Business Advisors (UKBA) believes that Time to Pay has been a major help to small businesses, and is concerned that its withdrawal will threaten the survival of many small businesses, just at the time that the economy is looking to them to help pull the country out of the slump. Time to Pay is a government initiative by HM Revenue and Customs (HMRC) that enables businesses to spread tax payments over several stages. It has been particularly helpful to small business with smoothing out quarterly VAT payments. Three small payments are much easier to manage than one large one. However the latest HMRC stats show that the Revenue are only granting Time to Pay at a third of the level in 2009. This is because they have made it clear that they will not allow repeat applications. HMRC have now announced that they will no longer publish statistics on this important safety net, further threatening the survival of this scheme. The recent poor performance figures from HMRC appear to … [Read more...]
