Most business owners are rightly focussed on sales. If sales dry up business costs will quickly result in losses; and losses will eventually burn through your assets until insolvency rears its ugly head.
In the current “lock-down” environment there is a temptation to ease back on collecting cash from customers if you offer credit in order to maintain sales.
And, of course, your customers may not be in a position to pay you according to agreed terms if their finances are being stretched.
What to do?
- Firstly, negotiate with your customers, if you sell goods or services have a candid conversation about payment, when will your bills be paid?
- Offer special discounts for cash sales or prompt payment. It is better to trim your profit margins than sell and increase bad debts.
- Use online direct debit resources so that you can collect payment from customers on the agreed due date. We can help you choose an appropriate scheme.
- Respond quickly to customers that are late in settling their account. There is no point in selling additional goods to a business that may be unable to pay.
If you offer credit to a customer – they pay you at a future date after goods or services have been supplied – you are volunteering to leave your money in their bank account for that period of time.
To minimise your risks of bad debts at this difficult time we recommend that you reconsider your credit control processes. Please call if you would like our help to do this.