cash flow seminar
out of 17
Post on 16-Jan-2015
Embed Size (px)
- 1. ALPHA DEBT RECOVERY LTD
- LINDA WALTON - MANAGING DIRECTOR
- 2. CASH FLOW IS KING LONG LIVE THE KING !!!
- Knowing your customers
- Terms & Conditions
- Honest, Reliable and Fair
- Chasing your Payments
- When all else Fails !!
- 3. Knowing Your Customer
- Check out exact name & legal status of business youre supplying. If sole trader/partnership they may be liable for debt so make sure you have full details. Get FREE check from www.companieshouse.co.uk web check service.
- Dont be afraid to push for all info at this stage its much easier now than later on !
- Watch out for friendly references choose your own they will be more effective.
- Invest in credit referencing information it could save you a bad debt we charge 35 for this facility .
- Set rules that you will apply and dont be tempted to break them, even if put under pressure to supply urgently.
- 4. PAYMENT TERMS
- Set out & agree payment terms in advance & in writing. Its better to know what to expect than leave things to chance.
- Watch out for any wording in documents from your clients that changes the agreed terms ie. If you accept their order you might be signing to their new payment terms if you fail to challenge at this stage their terms will take precedence.
- Payment terms on your invoices should include the words We will exercise our statutory right to claim interest (8% over Bank of England base rate) & compensation for debt recovery costs under the late payment legislation if we are not paid according to our agreed credit terms.
- Even if you dont intend to do so it is a very useful deterrent against late payment.
- Raising a further invoice for interest and late payment charges is a great way to gain your clients attention and raising the profile of your outstanding invoices
- If your client tells you they will have to take longer to pay in the future, you will have to decide how important their business is. If they are claiming extended payment terms for invoices already raised, you should demand payment under the previously agreed terms and make new agreement for future trading with extended terms should you wish to do so.
- 5. INVOICING Vital first step in achieving healthy cash flow
- Ensure invoices are fully compliant with HMRC if VAT registered visit: www.hmrcvatinvoices.co.uk
- The sooner you ask the sooner you get paid send by 1 st class mail or email.
- Get invoices right raising credit notes or re issuing invoices takes up time better used elsewhere & changes payment due date !!
- Have a system for resolving disputed invoices promptly to avoid stalling tactics.
- 6. What should be on your invoice ?
- Your full name & add.
- Your VAT no.
- Invoice date.
- Correct client name.
- Correct client add.
- Delivery add, if different.
- Delivery date and method.
- Customer purchase order number
- Full description of goods/services supplied.
- Accurate quantities, prices, discounts and total amount due.
- Payment terms and due date.
- How payment should be made with your Bank details on it.
- Invoice or reference no useful if paying by direct credit.
- Add words we will exercise our statutory rights to claim interest @ 8% over Bank of England base rate & compensation for debt recovery costs under late payment legislation if we are not paid in accordance to our agreed terms and print your terms and conditions on the back of invoice.
- 7. TREATING SUPPLIERS FAIRLY
- 8. Cashflow keeps businesss in business, if YOU dont pay on time consider the consequences you want your invoices paid on time so ensure good and ethical business practices at all times
- Make sure payments due are in your cash flow forecast so they dont catch you by surprise.
- Talk to suppliers early if you have a problem preventing prompt payment.
- Paying promptly earns your business respect, may allow you to negotiate better deal or discount in the future.
- Helps you avoid possible late payment fees/interest.
- Ensures suppliers dont stop your credit.
- Improves trading relationships.
- Makes you a more valued customer.
- TREAT YOUR SUPPLIERS AS YOU WANT YOUR CUSTOMERS TO TREAT YOU !!!
- 9. CHASING PAYMENTS !!!
- When you get paid the sale is complete.
- When a customer doesnt pay
- theyre hanging on to money
- that is rightfully yours and
- you should ask for it .
- Have a routine system for
- following non payment that
- includes letter/statement email
- telephone, but be prepared to
- act more quickly if it is for a large
- amount or you are concerned
- about the customer.
- 10. My Top Tips on chasing payments
- If the invoice is large call the customer before due date to make sure they have received it and there are no problems, this is good customer service.
- Make immediate contact when payment has not been received, be assertive about what you expect and when you expect it, make the consequences of non payment clear. Follow up promises to make sure they are met.
- If a client persistently pay late get them checked out & consider if you are prepared to continue on credit terms. It may be better to lose a client than suffer a bad debt because that way you lose the goods and money owed.
- Be polite, persistent and professional. Do what you say you are going to do and when you said you were going to do it !!!
- 11. When all else fails
- Sometimes you just cant get paid. Youve done all the right things and still your money hasnt arrived. The longer the debt remains unpaid the more likely it is going to turn in to a bad debt which affects your cash flow, profits and damage to your business
- 12. OPTIONS TO CONSIDER
- Using Debt recovery company to act for you Often work on a NO WIN-NO FEE basis, collecting debts is their specialised area and most will escalate action as and when it becomes necessary, a %age of monies collected is usually applied which can be very high. Most companies offer a wide range of services including Tracing of debtors/credit checking/stat demands and winding up orders. Statute of limitations states that debts up to 6 years can be recovered in England & 5 years for Scotland
- HMCS money claim online and for Scotland small claims in the Sheriffs court.
- Issue a stat demand that can be followed up 21 days later with a bankruptcy (individual) or winding up order (company) as long as debt is over 750, however if you force company in to liquidation you risk the chance to recover any money at all.
- 13. INSOLVENCY
- BANKRUPTCY applies to individuals/sole traders & individual members of partnerships. Petitions may be presented to court by creditors who are owed 750 +
- IVA individual comes up with a proposal to pay off debts this can be done by a licensed insolvency practitioner and is an alternative to bankruptcy
- 14. Continued.
- COMPANY VOLUNTARY ARRANGEMENT a formal proposal is drafted at a creditors meeting to pay part or all of the debts, if accepted by the creditors the arrangement becomes legally binding & the directors will retain control of the company.
- COMPULSORY LIQUIDATION is the winding up of a company or partnership vis a court order. A petition is presented to court by a creditor stating amount owed by that company and that they cannot pay. The official receiver becomes the liquidator when the order is made but an insolvency practioner may be appointed if the company has significant assets.
- LIQUIDATORS ROLE To realise the companys assets, pay all the fees and charges arising from the liquidation, & pay the creditors as far as funds allow in a strict order of priority.
- CREDITORS VOLUNTARY LIQUIDATION similar to compulsory however it is the share holders that make the decision to wind up the company. A creditors meeting is held to nominate the appointment of a liquidator & consider a statement of affairs. A committee can be nominated to realise the companys assets etc in the liquidators
View more >