Coming out of the festive period and into the New Year, many of us are now back into the routine of the working week.
This is an exciting prospect for many with new goals and a fresh perspective. However, for many of us this can also be a daunting experience particularly when it comes to managing cash flow.
Whether you are a sole trader or a business, having control over your finances is imperative and is something that requires constant time and attention.
For businesses to run effectively and succeed, it is crucial to ensure you have a tight grip on your incomings and outgoings; and that you take steps to protect yourself for when things don’t go to plan.
In terms of cash flow, many law firms have adopted policies which require payment on account for services provided, which then negates any need for chasing clients for outstanding payments. However, this approach is not suitable for all businesses, especially in industries where common practice is to invoice for payment after the goods/services have been provided; an example being the construction industry.
There are alternative measures that can be taken in these circumstances. It is crucial that your credit control and debt recovery procedures are efficient (but not overbearing) and that you have terms and conditions in place which provide adequate protection. You may also wish to consider whether personal guarantees are appropriate or that your terms of sale entitle you to retain title to goods sold until full payment is made. Not all businesses and traders will benefit from these arrangements and it is important to find one that works for you.
So, what happens in the event that your client delays or fails to pay once the goods or services have been provided?
This can have a detrimental effect on businesses and traders who rely on this source of income to maintain positive cash flow. Not to mention that you are entitled to be remunerated for the goods or services you have provided – a business cannot operate for free!
If you, like many others, are experiencing difficulty in recovering monies from your debtors then you could benefit from taking specialised legal advice to give you a better understanding of the process and to find the best possible solution that works for you. You may also wish to consider putting protective measures in place for issues that may arise in the future so that you or your business can be best prepared for whatever the future may bring.
If you need advice on this topic to support your business, then call us on 0151 236 8871 or email info@Morecrofts.co.uk.