Within a month of 2023 starting; already some big companies have struggled. Following made.com's sale by Next, Middletons entering administration and sofa in a box retailer snug being purchased by SCS, cashflow is a concern across the spectrum.
The Organisation for Economic Cooperation & Development (OECD) has a bleak prediction for this year. They recently stated "The UK will face the worst downturn of any major economy next year". British GDP is predicted to shrink by 0.4% in 2023, with a 0.2% growth in 2024.
All this means it is likely businesses will find it harder to pay invoices… and get paid. Paying bills and outstanding invoices will become more troublesome the longer the arrears stretch. With the economy struggling, now is the time to consider cementing your debt collection procedures.
What if I owe money?
Let’s look first at what we recommend if you owe money. If you have invoices you need to pay, our best advice is to be up front. Being honest and talking about the matter is an underrated technique in business. Many SMEs who begin to struggle start to ignore debt. They stop responding to messages and try to bury their head in the sand. This is a tactic AYOM has seen numerous times.
When money is owed, we always advise conversation. Contact is a vital tool in business and many owners would prefer to be told you may need longer to pay than silence. This gives an opportunity to look at payment plans and agree a structure that suits everybody. That way you clear a debt off the books and your creditor has the safety of expecting regular payment.
Conversing will likely result in the creditor being appreciative. They will be thankful for the honesty and clarity. With many businesses relying on strong relationships, why not keep that bond strong by talking.
What if I’m owed money?
Our advice to getting to grips with non-payers fast is simple; be proactive. Any business wants to protect its teams and cashflow. Without strong cashflow, you can't operate at max capacity and remain resilient. Being organised, knowing what is due, when, by whom should be a priority. From here you can get in touch to discuss any issues with payment.
Compiling a list of debtors with amounts and due dates should be a first port of call. From here you can contact and arrange payments or work out plans. Contacting a debt collector to chase non-payers or those avoiding will help keep the matter at hand. Debt collectors apply pressure; reminding debtors the matter will not vanish. It also opens the gate to escalation if required. Debt collectors can suggest reviews of cases and look at legal matters should debtors persist in avoiding payment. While legal proceedings can take time, the sooner you start the process of debt collection, the better. Doing so increases your chance of recovering money before needing court action.
Be mindful of the future
Even if you aren’t feeling the effects yet, planning is key. Failing to prepare is preparing to fail. With rising fuel prices and energy costs already in motion, businesses must consider the changes approaching. Costs will go up on basic running of business, making cashflow vital.
Taking stock of your current payment terms can be beneficial. Know that people you supply goods or services to may also feel the pinch and require a different structure. If you plan appropriately, you can ensure a healthy influx of money. All this without jeopardising relationships.
AYOM deals with businesses every day looking to cement a solid cashflow. When times are turbulent, knowing processes are in place can be the difference between prosperity and floundering. We operate via strategies involving consistent and escalating pressure to ensure money doesn’t go unpaid. We use several communication channels and expert collectors. Our collectors successfully recover hundreds of thousands of pounds for UK businesses each year.
Contacting collectors earlier
AYOM’s Collections Manager spoke of recent changes in AYOM’s client base. Speaking about the last quarter and preparation of the expected downturn, she told us:
A lot of clients are approaching us sooner, almost as soon as the original payment terms lapse. There are concerns around debtors going quiet and seek that consistent voice in their ear. That’s where we find our biggest successes. The earlier people contact us, the more likely we are to secure full and prompt payment of a debt. While we do have great recovery rates after the initial 6 weeks, it’s inside those first few weeks when our pressure pays off. We would always recommend having a debt collector in mind at the first sign of payments falling behind.
If you are worried about credit control and non-payment, get in touch with our expert debt collectors. We can offer advice and procedures that ensure your business continues to operate at full capacity. To chat to an adviser simply call 0800 130 3357 or email enquiries@ayom.co.uk for more information.
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