ImagesMagUK_Digital-Edition_Dec17

BUSINESS DEVELOPMENT www.images-magazine.com 16 images DECEMBER 2017 ■ October saw a record decline in non-food sales, reports the British Retail Consortium. It notes: “Clothing sales were particularly hard hit. After a brief uptick, fashion sales reverted back to the dreary theme we have seen for a number of months this year.” www.brc.org.uk ■ The government introduced its Trade Bill in November, with the Customs Bill slated to follow soon. International Trade Secretary Liam Fox said, “For the first time in over 40 years the UK will be able to shape our own trade and investment agenda – and we are determined that businesses and consumers can take advantage of this opportunity.” How can I get my customers to pay on time without losing them? Cash is king, so how do you keep your cash flowing, and how do you encourage clients to pay on time without jeopardising the business relationship? The secret is in the preparation and planning, and professional credit management. It starts with the simple things, like ‘knowing your customer’. This is a mantra that should be followed with any new business you take on. Knowing who you are supplying is vital and reports from credit reference agencies can support your own research and experience, as well as finding out whether they are signatories to the Prompt Payment Code, which has a route to challenge if they let you down. Visiting potential customers in person is always advised where possible; it is amazing how much you can learn from a walk through the warehouse, or just by seeing the cars in the car park. Only by knowing exactly who you are trading with do you fully understand the risk and are able to check if they are good for the amount of credit you need to grant them. This, in turn, will help determine their ability to pay. The second crucial part of your preparation and planning is to set clear payment terms from the outset that are agreed, in writing, by both parties. Don’t get too hung up on whether the credit terms are 30, 45 or even 60 days (depending, of course, on what goods you are providing); certainty of payment is far more important, and helps you manage your own cashflow accordingly. When it comes to the paperwork, always invoice promptly, and find out in advance whether there are any specific processes you need to follow (such as including PO numbers); find out also such simple information as the correct legal entity you are dealing with and need to invoice. An SME once complained to me that he had not been paid by a major supermarket; he thought by sending an invoice through to their head office, without any reference or order number, and not, as it happened, even to the right trading division, they would still somehow manage to marry up his invoice to the goods he supplied. Don’t be afraid to ask for what’s yours. Establish routines for following up on non-payment, using basic tools such as letters, email and telephone, but be prepared to stay flexible if the amount outstanding is large or you have concerns over the customer’s financial viability. Such flexibility may include withholding further deliveries if required. Looked at another way, offer discounts for early settlement, or trade off a longer payment term for a larger order. Remember that if you are providing an item that is crucial to your customer’s own product or service then you can negotiate from strength, however large a business they may be. Understanding the timing of a customer’s payment run is also important. So too is having a policy in place to escalate a payment dispute beyond the individual with whom you placed the order to the higher levels of financial director or even the CEO if necessary. Remember that a customer who doesn’t pay you probably isn’t paying others suppliers too, in which case their financial viability is in doubt. And bear in mind; a customer who doesn’t pay isn’t a real customer at all. Expert advice on the business of running a garment decoration company Philip King is chief executive of the Chartered Institute of Credit Management (CICM), the largest recognised professional body in the world for the credit management community. The CICM provides advice to businesses of all sizes on how best to manage cashflow and credit. The CICM’s Managing Cashflow guides are available online at http://www.cicm.com/resources/ cashflow-guides. www.cicm.com Q&A A customer who doesn’t pay isn’t a real customer at all