Jenny Oldfield, CEO,Veritas Commercial Services
Being embarrassed to chase business payments is a common problem and one which can cause serious cashflow problems which may result in the business failing completely.
Business owners and their accountants can be driven to sleepless nights worrying about late payments.A study carried out by Bacs Payment Schemes Limited (Bacs) revealed that 78% of SME owners are being forced to wait one month or more beyond their agreed terms before they are paid.
In total, it was found that the UK’s smallest businesses are facing a current bill of £6.7 billion, up from £2.6 billion in 2017, just to collect money they’re already owed.
Late payments not only causes stress, they also have a knock on effect on suppliers connected to the business. In the same study, over a quarter of SME business owners experiencing late payments were forced to pay their own suppliers late, with 28% saying they had to cut their own salaries in order to maintain the business.
It is a British trait to be embarrassed about asking for a payment.Many business owners and accountants fall into the trap of suffering in silence, too awkward to push for payment. But the effects are far reaching and clearly have significant negative multiplier effects on the wider economy.
Below we discuss ways to avoid late payments and ensure that cashflow is one less thing to worry about;
Don’t be scared to ask
Remember it’s not rude to chase money that is owed.
It is often left in the hands of the accountant to chase payments, which can eat into valuable time and resources. Never leave it too late. Chase as soon as the payment is overdue to ensure it doesn’t get completely forgotten about.
All staff within the business should be trained in the same way regularly so there is a consistent approach when dealing with late payments. Any professional practice should maintain the same level of service across every department.
In relation to the customer, from the outset credit control must be outlined as part of their journey to avoid late payments as much as possible.
Know your customer
Always carry out the necessary credit checks prior to onboarding a new customer. This will quickly determine whether they have had trouble making payments in the past. This shouldn’t be solely reserved to new customers either. If you have suspicions about an existing customer’s ability to pay, double-checking their current situation may provide you with invaluable insights.
First-hand experience in dealing with a customer can also provide you with knowledge which no amount of checks ever could. When is a good time to approach the customer? When are they uncontactable? How do they prefer to interact? As you build a picture of the customer you will soon learn what the approach is.
Don’t just “bill and forget”
The “out of sight, out of mind” attitude is a dangerous one. It is easy to forget about an invoice once it has been issued to the customer. To instil a strong level of customer service, make sure to call your customer before any invoices are due as a reminder.
Chasing debt on email is not proactive enough. A phone call followed up instantly with an email reiterating the payment terms covers all ground.
You should ensure that the terms of payment are clear from the beginning, and don’t be hesitant to reiterate this point. Define them verbally to the customer at the start and keep them visible and consistent on every invoice after.
Get professional help
After a while, chasing payments will start to take up precious time and resources which should be spread across other areas of the business.
This latest research, from the people behind Direct Debit and Bacs Direct Credit, shows that the cost of recovering overdue money is now at an average of £9,000 for each business per annum.
Accountants are experts at dealing with financials.Their time should not be spent chasing customers for invoices. That’s why hiring a credit control specialist may prove to be a prudent financial move which takes the pressure away from the accountant and allows them to do what they do best.
There are many common excuses for late payments, and a good credit controller will have heard them all before and know exactly how to respond. If a business doesn’t have access to a good credit controller, they should seriously consider using one,as being paid on time is vital to the survival of any business.
Siemens Healthineers gains EU nod for $16.4 billion Varian buy
BRUSSELS (Reuters) – EU antitrust regulators on Friday cleared with conditions Siemens Healthineers’ $16.4 billion acquisition of U.S. peer Varian, paving the way for the German health group to become a world leader in cancer care therapy.
The European Commission said Siemens Healthineers pledged to ensure that its medical imaging and radiotherapy equipment will work with rivals in return for its approval, confirming a Reuters story. The pledge is valid for 10 years.
“High quality medical imaging and radiotherapy solutions are crucial to diagnose and treat cancer. The efficiency and safety of treatment relies on the ability of these products to work together,” European Competition Commissioner Margrethe Vestager said in a statement.
Varian is the leader in radiation therapy with a market share of more than 50%. The deal received the U.S. antitrust green light in October last year.
(Reporting by Foo Yun Chee)
Battling Covid collateral damage, Renault says 2021 will be volatile
By Gilles Guillaume
PARIS (Reuters) – Renault said on Friday it is still fighting the lingering effects of the COVID-19 pandemic, including a shortage of semiconductor chips, that could make for another rough year for the French carmaker.
Renault reported an 8 billion euro ($9.7 billion) loss for 2020 which, combined with gloomy take on the market, sent its shares down more than 5% in late morning trading.
“We are in the midst of a battle to try to manage a difficult year in terms of supply chains, of components,” Chief Executive Luca de Meo told reporters. “This is all the collateral damage of the Covid pandemic… we will have a fairly volatile year.”
De Meo, who took over last July, is looking at ways to boost profitability and sales at Renault while pushing ahead with cost cuts. There were early signs of improving momentum as margins inched up in the second half of 2020.
The group gave no financial guidance for this year, although it said it might reach a target of achieving 2 billion euros in costs cuts by 2023 ahead of time, possibly by December.
Executives said they were confident the carmaker could be profitable in the second half of 2021, but that they lacked sufficient market visibility to provide a forecast.
Renault struck a cautious note, saying it was focused on its recovery but warned orders had faltered in early 2021 as pandemic restrictions continued in some countries.
The group is facing new challenges as the European Union tightens emissions regulations and after rivals PSA and Fiat Chrysler joined forces to create Stellantis, the world’s fourth-biggest automaker.
The auto industry endured a tough 2020 but a swift rebound in premium car sales in China helped companies such as Volkswagen and Daimler to weather the storm.
Auto companies globally have since been hit by a shortage of semiconductors that has forced production cuts worldwide.
“The beginning of the year has shown some signs of weakness,” De Meo told analysts, but added the chip shortage should be resolved by the second half of 2021. “We have taken the necessary measures to anticipate and overcome challenges.”
Renault estimated the chip shortage could reduce its production by about 100,000 vehicles this year.
The group was already loss-making in 2019, but took a sharp hit in 2020 during lockdowns to fight the pandemic, which also hurt its Japanese partner Nissan.
Analysts polled by Refinitiv had expected a 7.4 billion euro loss for 2020. The group posted negative free cash flow for 2020.
The 2018 arrest of Carlos Ghosn, who formerly lead the alliance between Renault and Nissan, plunged the automakers into turmoil.
In a further sign that the companies have been working to repair the alliance, De Meo told journalists that Renault and Nissan will announce new joint products together in the coming weeks or months.
Renault has begun to raise prices on some car models, and group operating profit, which was negative for 2020 as a whole, improved in the last six months of the year, reaching 866 million euros or 3.5% of revenue.
Analysts at Jefferies said the operating performance was better than expected. Sales were still falling in the second half, but less sharply.
Renault is slashing jobs and trimming its range of cars, allowing it to slice spending in areas like research and development as it focuses on redressing its finances. It is also pivoting more towards electric cars as part of its revamp.
It was already struggling more than some rivals with sliding sales before the pandemic, after years of a vast expansion drive it is now trying to rein in, focusing on profitable markets.
De Meo told journalists on Friday that the French carmaker will make three new higher-margin models at its Palencia plant in Spain, where manufacturing costs are lower, between 2022 and 2024.
($1 = 0.8269 euros)
(Reporting by Gilles Guillaume and Sarah White in Paris, Nick Carey in London; Editing by Christopher Cushing, David Evans and Jan Harvey)
UK delays review of business rates tax until autumn
LONDON (Reuters) – Britain’s finance ministry said it would delay publication of its review of business rates – a tax paid by companies based on the value of the property they occupy – until the autumn when the economic outlook should be clearer.
Many companies are demanding reductions in their business rates to help them compete with online retailers.
“Due to the ongoing and wide-ranging impacts of the pandemic and economic uncertainty, the government said the review’s final report would be released later in the year when there is more clarity on the long-term state of the economy and the public finances,” the ministry said.
Finance minister Rishi Sunak has granted a temporary business rates exemption to companies in the retail, hospitality, and leisure sectors, costing over 10 billion pounds ($14 billion). Sunak is due to announce his next round of support measures for the economy on March 3.
($1 = 0.7152 pounds)
(Writing by William Schomberg, editing by David Milliken)
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