Cash flow is life blood of small business and they must be helped to get paid!

The Business Battle-axe, Amanda Vigar of Darlington accountants V&A Vigar & Co (Darlington), is backing government plans to ‘name and shame’ persistent late payers, following news that a scheme to ensure small companies get paid on time is not working.

A YouGov survey says that as many as 85% of small and medium have recently experienced late payment problems. The Government is currently considering a range of measures to compel companies to pay on time and will even name and shame those who fail to do so to highlight bad records of payment.

Amanda Vigar, managing partner at V&A Vigar, said: “It is extremely worrying that the government-backed Prompt Payment scheme appears to have failed. Although there are rules in place that compel bigger companies to pay more quickly, smaller firms are reluctant to use them for fear of losing their client.”

Amanda Vigar, who has a regular blog at http://businessbattle-axe.blogspot.co.uk/, says that “Small businesses are the life blood of our economy and cash flow is the livelihood of small businesses.” The Government has announced that it is planning to consult small and medium sized businesses later this year on the way forward for the late payment problem.

“The idea that persistent late payers can be named and shamed to increase transparency and to force them to pay up on time is an excellent one. It could not come too soon, in my opinion. Late payment causes so many problems for small businesses and can literally mean the difference between paying and not paying staff. For even smaller companies, it can sometimes mean the difference between continuing in business and going under.

“The problem is that big companies find every excuse to delay payment saying they have long authorisation processes and that it's missed deadlines. Basically, they can say anything to get around not paying!”

Amanda added: “In the meantime, there are several things that smaller businesses can do to get paid on time.”

These include:

•           Check payment runs - find out when customers make payment runs and what the cut off is.

•           Set credit terms – Small companies should set short terms - seven days not 60 days. You should have a clear collection policy in place outlining credit terms, how you will collect money and any overdue payments.

•           Make invoices clear – having a good system in place to record invoices is key. There are many software packages available so you can also track payments. Remember also that, the last time a company can object to an invoice they receive is on the day they receive it. After that time, they cannot quibble and dispute it.

•           Follow customer instructions – large companies in particular often have strict systems for paying. Maybe they want a special invoice number – so make one for them. Also ensure that it’s consistent throughout your communications to avoid confusion.

•           Follow up promptly – Make sure you have a consistent collection procedure and always follow up as promptly as possible. Keep a close eye on patterns in which clients generally pay; and ask yourself whether this fits in with your billing cycle? If the client does not pay ten days after the invoice is due, send them a ten-day letter re-iterating the fact that the invoice is due and (politely!) asking for payment.

•           Finally, always be polite – Shouting threats is not going to do you, or your business, any favours.

Are you being served?

By Amanda Vigar, Managing Partner, V&A Bell Brown LLP

I have since May this year been ‘Judge’ of my very own West Yorkshire Business Jury (www.businessjury.co.uk), which, as I’m sure you can imagine, has been great fun! The jury is a bit like a peoples’ panel, but for business, and is made up of twelve entrepreneurs who are polled on a quarterly basis for their opinions on a topical subject. We’ve had two judgements so far: a ruling that the high street is dead, but not beyond resurrection, and that standards of customer service are in meltdown.

Given that the jurors are intelligent people who care about the communities they live in, they offered solutions. The first was to encourage more artisan and boutique type outlets to tempt people away from their keyboards and to enliven our dying high streets.

You may have read about my ruling on the ‘falling standards of customer service’ in The Examiner earlier this month. The majority verdict was that standards of customer service are in freefall. Dire levels of customer care have, for some time, been a real bug bear for me.

Unlike a typical Judge, I am also a member of the West Yorkshire Business Jury, so I can both comment and give a verdict! Not only are standards slipping, they are close to being non-existent. You only have to walk into practically any shop on any high street to be met by grim-faced shop assistants who wouldn’t know proper customer service if it hit them in the face. Nowadays (and sorry for sounding like an old so-and-so!) customers are invariably treated to a grunt and a look of complete and utter disinterest when being served.

For too long, the poor customer - and it is all too often the older generations who pick up on poor customer service, arguably because they’ve been used to better – has been on the receiving end of bad service. As a nation, no wonder we are increasingly staying put in the comfort of our own homes to indulge our shopping habit online.

So, what can be done aside from avoiding the high street altogether?

One of our business jurors, Dot Goodhall, President of the Huddersfield-based neurological charity The Nerve Centre, says: “The retail sector in particular should really be looking at initiating a root and branch audit of their customer service procedures. Customer service assistants are the public face of a business, so it is vital that the friendliest and most polite attitude is presented.”

'No to business bashing!' says Business Battle-axe

Amanda Vigar, Managing Partner of accountants V&A Group, which has offices in Holmfirth, Darlington and Peterborough, has welcomed Prime Minister David Cameron’s clarion support for entrepreneurs in his Conference Speech.

Amanda Vigar, the Business Battle-axe (http://businessbattle-axe.blogspot.co.uk/), said: “Business bashing has become all too normal a game for some members of our political elite. Increasing taxation is not the way forward nor is wrapping our businesses up in increasing levels of regulation or bureaucracy, which is coming in ever greater bucket loads from the Brussels gravy train!

“Small and medium sized businesses are the very life-blood of our economy and creating the environment, or the ‘land of opportunity’ as Cameron has put it, to support them, is absolutely vital to our recovery. Profit, job and wealth creation and tax cuts are not elitist words but are crucial to our economy. Businesses employ people, put wages in peoples’ pockets and help us to buy things, which all gets the economy moving again! To punish businesses by raising taxation and stifling them with more bureaucracy, particularly at a time of fragile recovery, is total and utter madness!”

Amanda added: “The Coalition is not perfect and still has a way to go before getting the economy firmly back on the right track, but at least there is a mood of positivity when it comes to backing and not blasting business!”