Everyone is predicting a tough year ahead for business. The government is looking for the private sector to mop up many of the jobs which are going to be lost to the public sector, and a lot of people taking redundancy might well be thinking of going it alone – starting their own business.
Clearly this entrepreneurial spirit is going to need to be harnessed as the pendulum of employment swings back to the private sector. However, it is undeniable that the current environment is difficult for start-up companies. According to Broadgate Mainland’s client Daniels Silverman the time spent chasing late payment is cited as one of the biggest obstacles facing business start-up clients, and not having the resources available to recover money owed is one of the most common reasons given for start-up failures.
Daniels Silverman, which specialises in debt recovery, offers the following advice on credit management, which applies not only to start ups, but to everyone in business. Even PR companies!
The first major rule is to know your customer. Always perform credit checks on substantial customers to ensure that you know who they are and how they do business. A check through Companies House should help ensure that the director is reputable and the company not a ‘phoenix’ company (a new company formed from the remains of a failed company.)
Getting a signed contract, incorporating your terms & conditions before you start work should be a given; as should invoicing on time with accurate details. Another idea Daniels Silverman suggests is to phone customers before payments are due to ensure there are no queries. Monthly statements are something which you may not have considered before, but serve as ‘polite reminders’ to customers should things slip behind. If payments get very behind you should consider outsourcing their collection to a reputable debt collection agency. Make sure the agency is a member of the Credit Services Association.
So if you’re about to start up, and it looks likely that many more will be over the coming year, make sure that dodgy customers or late payments don’t down bring you back down.
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