Do you often feel out of control of your small businesses cash, like it is freewheeling down the road just out of reach? It really doesn’t need to be that way, and there are several easy ways to take control and get the cash flowing in.

  1. Make it easy for clients to pay. Take a look at your sales invoice. Does it have the payments terms clearly indicated? Are your bank details there? Have you provided the name to use on cheque payments? All of these things make it infinitely easier for your customers to pay you. Using a simple online system like FreeAgent will help.
  2. Ask for a deposit before starting work If you are providing a service that requires the purchase of materials, for example, it is not at all uncommon to ask for a deposit up front before work has started. This can be as little as you are comfortable asking for, but make sure your customer is aware an upfront payment is required.
  3. Regularly check your customer’s credit rating There are stacks of online credit check companies offering you an insight into the creditworthiness of your customers, many of which offer low cost pay as you go services or free trials. Make this a standard part of your quoting process when taking on new clients, or high value jobs. See these ones for a start: www.experian.co.uk www.creditsafeuk.com www.equifax.co.uk
  4. Pre-chase larger invoices If you offer longer payment terms, you can send out a reminder ahead of the invoice due date. Another useful reminder is a monthly statement to allow your customer to check if any of your invoices have gone missing.
  5. Take action on bad debts The first step is to send reminders and statements, but don’t let overdue invoices linger for long without taking action. If you have a good relationship with your customer, approach them directly by email or by calling them to remind them. If the problem drags on, it’s time to take court action to recover the money that you are owed. A court fee is payable, regardless of whether you win or not and there are no guarantees that you will get your money back. A gentler course of action would be the use of a mediation service, which may be quicker and easier than going to court. The fees are based on the total value of the dispute and you should engage a registered civil mediation provider (a list is available at http://www.civilmediation.justice.gov.uk/).