Every company needs cash, but more importantly every company needs cash flow. Keeping on top of what is owed and ensuring that payments are made on time can be about far more than just getting paid – it can ensure the survival of your business.
Late payments cause many companies to struggle to meet their own commitments. This is especially true of smaller to medium sized companies who don’t have the power to insist on immediate payment from their clients or the leverage to offer very slow payment times to their own suppliers.
The insurance company Zurich recently estimated that in the UK alone there is almost £45bn outstanding in late payments from one business to another. More than half of all SMEs are waiting for late payments. Two thirds of SME owners said that they directly knew of other businesses that had failed because of late payments and the cash flow crisis it creates. On paper your business may look healthy because of how much cash is due in the pipeline, but if you have nothing in the bank then how are your employees or bills going to be paid?
The UK appears to be behind other European markets in chasing late payments, but for the past four years smaller companies across Europe have been entitled to seek compensation for late payments. The problem is generally around the business culture of making additional financial demands from your clients.
So if your business is paying immediately for services, but chasing payments from clients month after month, what can you do? Start taking payments seriously. Organise your own team to consider payments as a strategic part of your business or find a partner that can help you to build these processes. Improving your payment processes is not just about chasing creditors, improving your corporate cash flow can have a dramatic positive impact on your business:
- Accelerate growth: instead of cash always being promised, it can actually be in your bank allowing for projects to be launched faster.
- Reduce payment delays: with fewer delays your team can spend less time chasing administration and reconciling who has not paid and why.
- Develop international markets: exploring new markets is a costly business that requires the stability of cash in the bank, not promises of future payment.
- Minimise the risk of non-payment: completely losing payments is the worst possible scenario, but with a more organised payment process you can mitigate the risk of this ever happening.
Payment is a strategic service that can transform your business. For more information on how Webhelp has been transforming payments for its clients since 1984 click here. In particular, we have considerable expertise in the areas of fashion, e-commerce, financial services, travel and telecommunications.
Are you seeing the benefits by improving cash flow for your business? Leave a comment below and let me know, or get in touch on LinkedIn.