What can the government, or more importantly, you do to speed up payments owed to your SME business? Here are 3 ways to help secure quick payments! (and no, you don’t need to buy a bat)

Government to manage slow paying clients for SME’s – Theresa May to crack down…

Today the government announced that it intends to help small to medium sized businesses speed up payments owed from their clients and in turn improve debtor day management.

The usual culprits seem to be large organisations that swagger nonchalantly through the relationship they hold with SME businesses, caring not a jot for what the impact of their late payment, may be.

It appears that some clients do not hold dear their SME suppliers and present a “you need us, more than we need you” approach.  And they may be right, although a motivated supplier is a better supplier and if you have to pay the bills anyway, then why try and enforce a 90-120 day payment stretch; particularly on a hard working business partner that will quickly become demotivated?

It takes years to build relationships and only a second to see them crumble and to unearth a new supplier takes time.  Perhaps that supplier just understands your business better than the rest.  They just get who you truly ‘are’ as an organisation and always offer a service, above the call of duty – and all for no extra cost.

The whole charade of non payment, especially by sizeable organisations, should be looked at seriously and hopefully the Governments plan can instil some urgency.

For a large org to apply a slow transaction – especially as they have financial control processes in place – can surely only be seen as a delay tactic.  This mindset could perhaps help manage suitable taxation, cash flow generally and may even be relatable to PLC value; when accounts are finalised then is it a good or a bad thing that a few extra payments stagger into next year? So, this rightly should be frowned upon as the big boys strong arm the smaller suppliers, putting their very existence in jeopardy.  Although this strategy invariably comes back to bite the usual culprits and here’s why…

If we can put this in simple recruitment terms then the real impact can be catastrophic for non paying clients. With a mutually rewarding and respectful relationship you often find that recruiters will prefer to submit their top drawer candidates to a prompt paying client.

Even if the terms are somewhat worse.

3 tricks that could help for quicker payments

  • Build great relationships with accounts payable (the odd edible item/office type gift will help) and not just your immediate point of contact, get to know the whole team.

 

  • Manage them – by this, we mean make sure that you submit your invoices electronically and also by signed for delivery – also, during the payment window make sure you ask regular questions, such as will your invoice be paid on the agree date, what is the manner of payment (if there are options) and is the invoice generally fit for purpose (PO numbers included).  This last point needs to be addressed when you submit your invoice and from the get go.

 

  • Copy in your client/sales contact, the person you dealt with to achieve the business in the first place and make sure they are cc’d into every invoice related email.  Often they can apply pressure or may need to authorise.  They will also be horrified and are often not responsible for your suffering; it is usually the financial controllers mission to achieve a debtor day outcome of well over 60 + days.  Beware.

Author: J Roberton – Interface Recruitment Leeds – March 13th 2018