Issue No. 41 - June/July 2008
Consider debtor finance as a short-term option
by Mr Shayne Bakewell
Collecting money owed to you is one of the least pleasant aspects of running a business of any size, but if you don’t do it you won’t have a business to worry about for very long.
To make the process as painless as possible for all concerned, there are three basic things – and one slightly more innovative idea – you should consider.
The first is simply to find the right person to collect your payments. Entrust the job to someone who
is tactful but firm and persistent. Don’t give it to the office junior or someone who is easily overawed
or ‘talked around’.
You should also establish some clear guidelines up-front, for yourself and others, on how and when you will expect payment and collect debts.
That said, it is important to ensure that your collection arrangements are appropriate to your buyers and debtors, particularly those regular clients who are important to you.
Be aware that customers may have their own cashflow cycles, particularly those who are middle links in supply chains.
Talk to your clients about what they realistically or fairly can do, not just what you expect them to do. A flexible approach that works is better than rigid demands that sometimes simply can’t be met.
A third idea is to provide a range of payment methods, including credit card facilities and direct debit. It is a lot cheaper than it used to be to offer these options, and more and more businesses are doing so. Bpay is also ...