Ross Williams writes:
This is a tough problem that is age old. There are two issues here. The first is the actual process of chasing up payments and the second is getting cashflow moving.
With regards to the cashflow issue, given your specific circumstances and the current climate it may make sense to configure a business to anticipate 90-day payment terms. I would also look at the negotiations and contracts with suppliers.
Another route is to incentivise early payment and penalise late payment at negotiation stages to protect against this. In addition you can consider issuing new contracts to existing clients, perhaps with an incentive that sees them sign up to reviewed payment terms. If the amounts that you are charging are the same then can you ask for cash in advance of supply.
When it comes to incentivising early payments, this needn’t cost you more and is in itself a business opportunity. You might be wanting to up-sell new products or services, for example. If this is the case then perhaps offering free subscriptions or trials of stock to early payments gets money coming in faster whilst also creating an opportunity for you to get products in front of buyers.
Relationships also matter. If your company has a personal relationship with suppliers then when payments become a problem this might be resolved sooner if you have a champion on the inside.
For large contracts and really late payments there are also companies that will collect corporate debts for. Time etc. is one business that provides this type of service. By detaching yourself from the process, should things get sticky, there is protection for the relationship between yourself and the client, which is the most important asset you are dealing with in this equation.
Ross Williams is the chairman and founder of
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