When do you start chasing a late payment? When the work has been supplied? When the payment terms have passed? When your cash starts drying up?
Too many businesses believe invoice collection should begin when they are overdue. However, when some customers respond only to final demands the time between job completion and payment collection can stretch cashflow to breaking point.
Too many businesses delay collection because they are worried that asking customers to pay will drive them away. It is possible to cause offence if you go about it in the wrong way, but you could enhance the relationship if you remain professional.
Here are some credit-control tips intended to help your business:
1. Decide on payment terms with clearly defined terms and conditions and stick to them. As long as they are communicated to your customers, they’ll be expecting you to follow up on any overdue invoices. If you are unsure what terms to use, seek expert advice.
2. All new customers should sign a credit account application form. The signatory should be a duly authorised person who should sign below a statement requesting explicit acceptance of the terms, with particular reference to prompt payment. Any prospective customer who refuses to sign could provide a useful early warning for you.
3. Check out the new customer with a reputable credit reference agency and set your larger customers up for monitoring so that any abnormal activity is spotted at the earliest point. This can help you avoid a bad debt. If an actual or potential problem arises, talk to your customer about how it affects your trading relationship.
4. Every priced document (eg price lists, quotations, etc) should contain a direct reference to ‘prices subject to payment within our terms’.
5. Don’t be afraid to reference prompt payment at the start of every new job or contract. At this point any customer-requested deviation from your standard terms should be confirmed in writing before work starts.
6. It is good business practice to adjust your application for credit each year and send out a new copy to all of your active customers to sign, ensuring that you always have an up-to-date agreement signed.
7. Avoid being subject to the buyers’ terms as printed on any written order by sending an order acceptance ‘subject to your terms of sale’. The last document that changes hands before performance of the contract becomes the contract document.
8. If you are sending out a large invoice telephone your customer shortly afterwards to confirm receipt and acceptance of the invoice to highlight any problems early on. If there are no problems you can confirm the payment date and their intention to honour their agreement. Telephone such customers shortly before the payment is due and seek confirmation it is being processed. If a query or dispute is raised, deal with it promptly and ensure that the customer accepts your response, thereby removing a potential block to payment.
9. If an account does go overdue, ring the customer immediately, ‘We can’t trace your payment, can you confirm it has been sent?’ is less confrontational than ‘Your account is overdue’, but still requires a specific answer.
10. If your best efforts to obtain payment produce no results (and two broken promises to pay is a good indicator) consider what you need to do to protect your investment in that contract. When the terms, as detailed on your invoice are exceeded, send an account overdue letter. Seven-days later send a final demand and seven days later initiate full recovery. Maintain constant communication in between these steps.
Effective collection of money you are owed is vital, no matter how large or small the customer. Ultimately your first responsibility is to protect your business. The consequences of not acting for fear of losing a customer could end up seriously harming your business. It is how you go about it that can make all the difference. Consider your own reactions when suppliers chase you for overdue accounts. If they are rude or offensive you might seek to take your business elsewhere but, if their approach is at all professional, your main reaction may well be ‘What can I do to pay that?’
Christopher Moore is a credit management consultant at ICSM Credit.
Lucy Cohen, co-owner of Mazuma (a national service specialising in providing monthly bookkeeping and accountancy services to small businesses and the self-employed), shares her advice on using social media for business.
1. 10 heads are better than one
“Ensure all staff have a vested interest in (or are aware of) your social media activities - making it part of regular business. You’ll be able to generate more content and ‘buy in’ from your staff when everyone is informed and involved.”
2. Be creative
“If you can’t be creative within the realm of digital media, where can you be creative? Use social media for fun yet professional communication with your audience/clients. Why not create an alternate personality for your business that your audience can speak to?”
3. Give what you get
“Use your social media channels for two-way communication. Some audiences, particularly younger people, prefer to communicate via this medium. Don’t be afraid to respond in the location where the conversation began.”
4. Be strategic
Have a strategy in place; know your objectives. You must know what you want your business to get out of your social media and online activities.”
5. Keep it open and honest
“There is always a risk that your online community will be exposed to negative comments about your organisation. Don’t ‘jump to delete’. Use criticisms as an opportunity to be open, transparent and honest with your audience.”
6. Get involved – whatever your business
Most, if not all, customers are engaging on these platforms online, they offer real potential to retain clients and meet new clients, whatever your business, get involved – or you may be left behind as technology advances.
With business leaders adopting clever business strategies, facing up to the recession has created unexpected opportunities for organisations. A focus on international trade, reshaping culture, outlook and getting innovative about financing has led to companies creating more efficient ways of working.
Research from HSBC Commercial Banking has found businesses with smart finance strategies are both more likely to be predicting growth over the next two years and projecting a growth in exporting- with access to finance, such as using trade and invoice finance being central.
Steve Box, HSBC Head of Trade and Receivables Finance Europe, participated in a webTV show where he answered questions about smarter ways of financing your business. Key topics covered include: How to form formal and informal alliances; maximising cashflow and how to free up working capital and investing assets for growth.
There are about 1.6 million freelancers in the UK — and today is your special day! There are lots of events happening to mark National Freelancer Day (NFD), including parties around the country.
Even if you are grafting away in your home office right now or perhaps catching up on work in a café — let’s face it, one of the joys of freelance life is being to work anywhere — why not stop and smell the roses and consider this — are you happier now than you were when you were office-bound? Would you ever go back?
According to online accountants Crunch Accounting, half of UK freelancers say they will never return to a 9-5 existence. Research released today shows that 47% of all UK freelancers would never be tempted back to the office.
The survey, commissioned to mark National Freelancers Day, asked UK freelancers how they might tempted back to a so-called “proper job”. Although many said that they would never go back, there were certain benefits that proved tempting. The most appealing lures were more flexible working hours (18%), more money (13%) and more control (8%).
One thing many freelance workers crave is more human contact — and if that’s the case there are some NFD parties just for you taking place around the country — in Brighton, Leeds, Edinburgh and Newcastle. Find out more here.
There’s also the National Freelancers Day Event at the RSA in central London. And while the tickets have sold out, you can watch online from 19.00 on the NFD website. It includes a Question Time-style debate on topical issues affecting freelancers involving leading lights from the worlds of business and politics. You can tweet live questions using the tag #NFD2012).
At a time when money is tight and resources are dwindling, it might be difficult for start-ups and small businesses to locate the funds they need to thrive and expand. It’s a disheartening situation for those that want to get and keep their businesses on the right track. But even in such times, there are still many institutions, organisations and individuals willing to finance small businesses, from banks to businesses, government bodies and the EU. Impossible? Not quite!
1. There are grants and funding opportunities out there
There might be grants you could qualify for that you never even knew about. Although you might think that having a small shop in a rural area would not be significant enough to secure grant funding, you could be an excellent candidate for a regeneration grant – the opportunities are out there, you just have to find them! For example, have you considered that funding programmes like the ‘Rural Shop Improvement Scheme’ exist? You might not know about the many grants and funding opportunities you could apply for, but dedicated funding websites provide a free searchable database of small business funding opportunities.
2. Don’t be afraid to apply
Although you might have heard that grants are difficult to secure, they are worth trying for. Nothing ventured, nothing gained. If you are passionate about your business and think you have a great reason to secure grant funding, you only need to translate your enthusiasm onto paper. Effort is required, but it might be more than worth it. Moreover, there are resources out there to help you write your grant funding applications, and review them. Free resources exist online to help you with your grant applications, like j4bGrants 10 Steps to Successful Grant Applications. There are also special services whereby funding professionals will take a critical look at your proposal and help you write the best possible application you could submit.
3. Stay positive
The fact that so many funding opportunities exist in the midst of a recession means you have as good a chance as any other business of getting the boost you need. Grant funding could provide you with amazing benefits, whether you are an established business or just starting out.
Searching for grants might be time-intensive, but luckily free resources exist to help busy business owners locate funding quicker and more effectively. j4bGrants.co.uk has been re-launched with a new-look website featuring thousands of opportunities for business funding. The site is completely free following registration, and allows you to search by business type, size or location, providing access to information that is constantly updated by a team of researchers who do the time-intensive searching for you. The opportunities are out there – you just have to find them!
A new trend is emerging at universities across the UK: students are avoiding the struggle of trying to get a graduate job by embarking on a route to self-employment while studying. According to a recent survey of 1,000 students commissioned by Viking:
While it may appear naïve or daunting for 18-25 year olds to start their own businesses without any experience and alongside the pressures of studying, the latter three statistics reveal key entrepreneurial traits. Some of the most successful businesses are run on a blend of energy, fresh thinking, enthusiasm, perseverance and discipline – attributes many students have in large measures.
Young entrepreneurs face the same challenges as any start-up, such as obtaining finance and establishing a customer base, but the government is getting behind this tide of budding business owners. David Cameron recently declared: "The future of our economy depends on a new generation of entrepreneurs coming up with ideas, resolving to make them a reality and having the vision to create wealth and jobs."
Support programmes are sprouting up across several university campuses:
Successful products of these programmes include Sam Piranty, who benefitted from BaseCamp funding to set up film production company InHouse Media, and Adam Roberts, who runs his business Go Dine from a hot desk at HeadStart.
“The support we receive from the team is excellent and it's good to share your ideas with other entrepreneurs based here,” Adam comments. “I have monthly meetings with a mentor, which sharpens my focus and helps clarify my thoughts. We’re fortunate that the university was forward-thinking enough to establish HeadStart. There should be more schemes like this for entrepreneurs. If you’re inexperienced in business, it is almost too difficult to set up without this kind of backing."
Universities are hot beds for entrepreneurial ambition and students should be encouraged to cultivate their ideas into commercial ventures. Nurturing young talent will doubtless produce a host of unique products and services and give the economy a much-needed shake-up.
BCSG creates, distributes and supports value-adding products and services to small businesses through financial institutions. For more information visit www.bcsg.com.
During Global Entrepreneurship Week, at Pickwell Manor in North Devon, a group of students on the CMS Pioneer Leadership Course will learn how to apply models of social enterprise to ideas that seek to enhance the lives of people and communities. The five-day residential is hosted by the Church Mission Society and students are encouraged to come along with a business idea to work on during the week. They will attend sessions on formulating a mission statement, devising a business plan, accessing different sources of funding and evaluating success. In addition, they will hear stories of social enterprises that are already thriving and get the opportunity to quiz their owners to discover the secrets of their success.
One example of good practice to be shared is Global SeeSaw, a company that sells wholesale, online and through their shop goods made by women who have been exploited through global trafficking. Run as a social enterprise, all profits are reinvested into the business to create more jobs. This gives vulnerable women, who are disproportionately affected by poverty, greater freedom.
Mark Wakeling, the entrepreneur behind Global SeeSaw, explains: “We’re committed to finding quality products that not only impress with their contemporary design, but also use recycled materials in their manufacture. While many fair trade companies pay just wages and don’t use child labour, we go a step further and ensure that all our manufacturing partners also reinvest their profits. We measure success in human lives changed, rather than wealth generated.”
Course leader, Jonny Baker, says of this unique learning opportunity: “To be sustainable, we must embrace the practices of social enterprise and seek to make a difference, while generating finances where appropriate. For too long business principles have been seen as incompatible with social action, but if we are to be relevant and innovative in the longer term, creative ways of demonstrating our faith need to be self-supporting as well as transformative. We have created this module to begin to address this and we’re encouraging our students to pursue activities that will not need to be wholly dependent on charitable funding.”
For more information on this venture see the CMS website.
In today’s uncertain economic climate, aspiring entrepreneurs would be forgiven for thinking that it is too risky and too complicated to start up their own business.
Yet, as Global Entrepreneurship Week takes place, it is clear that this is not necessarily the case – and in fact now could be the perfect time to consider setting up.
To mark this Week, Youth Business International interviewed 100 existing entrepreneurs to find out what they thought of the opportunities for people who are currently thinking of starting up their own business.
Our research shows a surprising amount of optimism despite the economic gloom, and that the recession is actually creating opportunities. Indeed, almost half of UK entrepreneurs (48%) predict that the environment for them will improve in the next two years, and more than a third (35%) rate the current operating environment for their businesses as good or very good. When asked about the next five years, three quarters (74%) expect to see the number of businesses being set up increase.
When asked where the main opportunities for UK start ups will lie between now and 2017, entrepreneurs identify local and regional markets (25%) and global markets (17%) as having the best prospects. That almost two in five cite global opportunities as being of importance reflects our own experiences of helping entrepreneurs set up in more than 30 countries. In our view, there is much potential for growth when start-ups make global connections – be it to establish trading partnerships, replicate successful business models or to swap shared experiences.
Entrepreneurs also highlighted the need to develop social media, digital and IT skills, as well as their abilities in financial management and marketing as important for future growth. Indeed, building entrepreneurs’ skills through mentoring and knowledge sharing is incredibly important – and at the heart of what we want Global Entrepreneurship Week (which is supported by Barclays) to achieve.
With over 3,000 events, the Week has been a brilliant opportunity for entrepreneurs to ‘pass on’ their words of wisdom – and for those seeking answers to their own business questions to find them. It’s great to see there’s so much optimism amongst current entrepreneurs out there – now let’s help the next generation of start-ups be part of the success story.
Andrew is Chief Executive of Youth Business International (YBI)
In the 1980s there was a notorious sales technique for selling health insurance that was popular in the US. A salesman would make a cold call and open up the dialogue with a potential client by shouting down the phone: "You're going to die! What are you going to do about it?"
I can't imagine how fast a ton of bricks would be dropped on the company that tried that technique today, nor who exactly would drop it first, the regulator or consumer, but when it comes to business insurance it's tempting to take a similar stance to those who don't really see the point of public liability insurance.
This is your small fledgling business. To start up, you have forgone the security of a monthly wage, the certainty of holiday pay and other benefits. It's a brave, quasi-insane move that is incredibly admirable and should be awarded the highest of accolades. Why then do so many people not see the value of taking this financial and logistical tightrope walk without a safety net?
A very small number of businesses don't need it, but these are unusual and don't really operate with other people (a rarity in any venture from which you hope to make money). Any small business that has survived longer than a few months will understandably be very cautious of spending money and many businesses will see public liability insurance as an unnecessary expense.
At the risk of sounding like I'm hawking wares and crossing over into pushy ‘80s salesman territory, let me explain... You might never need it. Most people never will. That's the point of insurance. If you do need it, however, it will likely be because of a completely random act over which you have no control over. It doesn't matter how careful or responsible you are, you are completely at the mercy of third parties. Legal action from someone feeling wronged could, at best, set you back significantly. At worst – it could shut you down completely.
If you run a small business, you probably started one up to be your own boss and take control of your life, but you must face the fact that you have less control than you think, and you're going to benefit from having something there just to catch you if things go horribly wrong.
Insurance is rarely the first thing anyone thinks of when starting up a business. It's not always even the second or third thing, but it probably should at least be in the top five. A lot of business insurance packages are not complicated and you've undoubtedly got enough to keep you awake at night without worrying about the possibility of random chaos undoing all of your hard work in an instant.
This piece was provided by YOUR Insurance, an insurance broker specialising in public liability insurance and employers’ liability insurance for small businesses.
Research commissioned by the Association of Accounting Technicians suggests that women who leave their chosen profession to have a baby face a pay cut of up to £20,000 a year when they return to work.
The study of more than 2,000 women who have chosen or “been forced by time or financial constraints” to abandon their chosen career after giving birth found that 60% of respondents earn less now than they did before they went on maternity leave.
Some 70% are over-qualified for the jobs they now do and such positions would have been “below them” before giving birth. The average working mum earns £9,419 less a year when compared to previous income, while necessity has forced nearly a quarter of respondents to take any job to make ends meet.
A third said the difference in salary has “affected their life negatively” and one in seven admitted that it had affected their marriage. Four in ten do their current job because it “fits in with family commitments and brings in extra money”; with just 16% saying they are passionate about their profession; and 30% describing their current job as “menial”. While working hours were reduced to enable mums to balance parenting responsibilities, only 20% of respondents said their current job was less stressful.
Respondents’ average age for having their first child was 25 and 38% thought their employer wasn’t supportive enough throughout their pregnancy. Flexibility around school hours, job location and low stress levels were found to be the biggest priorities for working mums, with salary fourth on the list.
Many of us would like to believe that starting a business offers women a better alternative, yet it seems that many women are not planning to start their own business any time soon.
As reported by the FT in August, according to an Ernst & Young survey, just 16% of the 1,000 working women questioned wanted to start their own business, while the “Global Entrepreneurship Monitor UK Report 2011, which surveyed more than 10,000 people in the UK, noted ‘that men tend to have more positive entrepreneurial attitudes than women’ and even that women were more risk-adverse when it comes to entrepreneurship.
Whether that is true or not, are there any other reasons why more women – particularly young mums – don’t start their own business? Leaving aside all of the common reasons why both sexes don’t start their own business, lack of access to finance is often stated as a hurdle more likely to affect more women more men. Childcare is another huge issue, of course.
And however much we like to believe otherwise, balancing the demands of running a business with family commitments remains a massive challenge. The dream of being able to really have it all remains just that for many women – a dream.
As journalist, author and mumpreneur expert Antonia Chitty admits: “Almost all mumpreneurs are doing it so they can spend more time with their family, and it’s always a bit of a struggle to find the right balance. It’s hard to find enough time for your business, your family, your partner and yourself.”
Perhaps none of us should be surprised that many mums compromise by earning less and doing jobs they don’t want to do or hate, rather than start their own business.
Starting a business can be one of the most challenging, nerve-wracking – yet rewarding – decisions you can ever make. The good news is that there’s a lot of other people out there who’ve been there, done it, and have great advice they can share.
But the entrepreneurial community is spread thin, and, let’s face it, often pretty busy. So how do you go about tapping in to all the wisdom that’s out there?
This year’s Global Entrepreneurship Week is about helping you do just that. Running from 12-18 November, with some 2,500 events in the UK alone, this year’s theme is ‘Pass It On’ – asking anyone who’s been involved in starting a business to share the advice that’s been the most helpful to them in their entrepreneurial journey, with an eye to helping those just starting out.
Entrepreneurs of all shapes and sizes will be sharing their thoughts on social media and in the media (follow us at @GEWUK and #GEWPassItOn for more updates). But there’s also a wealth of events happening all around the country, including:
Even if you’re too busy to get to such events, there’s plenty you can get involved with virtually. For example, The Global Brainstorm will broadcast live from a central London location, featuring a free live brainstorming session asking the question – What do you need to know to succeed?. And the Business & IP Centre at the British Library is hosting two webinars each day to give you the essential information you need to protect your business and improve profitability.
So, between 12 and 18 November, take some time out of your working day to get involved. Whether you’re looking for information or want to share it, you can be part of the world’s biggest annual celebration of entrepreneurship. And you never know – you might find the answer to that business puzzle that’s so far eluded you…
Andrew Devenport is the Chief Executive Officer of Youth Business International, which manages Global Entrepreneurship Week in the UK. For more information visit www.gew.org.uk
In the early months of a startup situation you don’t normally need to worry about team building because everybody is really involved and committed to pushing the business as hard as they can. Over time however, as the number of employees start to grow, then you need to be more focussed on motivation and team building.
Everybody is different, with differing backgrounds, expectations, work ethics and work rates, so a key thing to watch is allowing these differences to work together, but also to make sure that people don’t rub each other up the wrong way.
If you read my blog you will know that I try hard not to take life too seriously. I am a great believer in trying to keep a light-hearted atmosphere at work, so here are my personal six top tips for keeping your team motivated and looking forward to coming to work every morning:
Number One: Say thank you
I’m a great believer in thanking people for doing their job, so long as they are doing it to the best of their ability. When you have your head down, concentrating on what you are doing, a pat on the back and a “well done” followed by a “thank you” at the end of the day I think make a real difference.
Number Two: Keep it simple
I’m a sucker for cliches; “keep it simple” and “one small step at a time” are favourites. Make tasks achievable and rewarding by ensuring that you don’t give people huge jobs that will take months to complete; break it down into bite-sized chunks.
Number Three: Anticipate trouble
It’s my experience that sometimes people get bogged down and can’t see the wood for the trees, so either get them to talk to someone else about the problem to give them a fresh perspective, or give them something totally different for a day or two. This gives the subconscious time to think about the problem and very often come up with a solution.
Number Four: Provide a decent place to work
I started my business from home, and have striven to keep a homely atmosphere ever since; we have a banter and we share the chores of making the tea and washing up at the end of the day. I’ve fitted our work spaces with daylight lighting so that working areas are brightly illuminated and .cheerful; even on a miserable, dark, wet Monday morning, the office is bright, warm and welcoming for everyone when they arrive.
Number Five: Have a bit of fun
I love cooking, so on an ad-hoc basis we’ll have a cooking or baking competition. So far we have produced soup (the chocolate soup was memorable!), curry, cake (don’t ask about the sugar cake!), sweet pie and chilli. There is another one coming up, but they won’t let me dictate the theme this time. And for the record - I have yet to win one of the competitions, even though my entries are the best! And I do bear a grudge!
Number Six: Celebrate success
When we achieve something extraordinary in a month I’ll invite everybody out for a curry at our favourite Indian restaurant. [Ed: Wish I lived near you.]
Above all, what I aim to achieve is to make my team feel appreciated and valued and so far it has worked well for me in my growing business as I don’t lose staff because they are dissatisfied, but rather because they move on to roles that I can’t offer. And people who started nine years ago are still with me; they are fulfilled and have developed way beyond their own expectations in that time.