Tag Archives: small business

Train Life

I set myself a couple of challenges with my New Years Resolutions this year: firstly, to reduce my carbon footprint and secondly to use my time more effectively.

So the first change to make on the way to achieving these goals was to switch the car for the train where possible. Admittedly I am lucky to live within a stone’s throw of the Tarka Line between North Devon and Exeter, but even so I have been surprised by the outcome.

First of all the train is cheaper than driving in to Exeter, especially when you add the cost of parking. And it achieved my primary objective of reducing my car’s carbon emissions.

In addition to this I can sit on the train working, reading, or writing (blog posts for example!). I try to spend my driving time listening to audiobooks and while this is mostly educational it always feels like using up dead time rather than being productive time.

So far so good, these are the changes I expected to see. But I have noticed other changes that I didn’t expect:

I have to be more organised – I think I’m pretty organised with my client work, but planning of my personal time is always far from being a priority. Now I am making more time for getting to and from events, so I am more relaxed and more likely to be on time!

I’m walking more, to and from the station, which I hadn’t realised would happen. And it’s through the centre of Exeter past all the lovely shops; because I’m walking I can I actually appreciate it, rather than just grabbing essentials at service stations.

Finally while I like to think that I am comfortable with new situations, I’ve been surprised at how much I’ve had to learn (read this as how many times I’ve had to ask people for more information!) and this has highlighted how stuck in my ways I’ve got.

I’ve learnt loads about the Tarka Line, needing time request that I stops at the right place, needing to find out which platform to be on (sometimes there’s just one, for both directions!), how long it takes to walk across Exeter, and how to solve the various problems that have already sprung up.

Plus I’ve learnt more tedious things like how my laptop bag isn’t as waterproof as I had thought and how I need to reconsider my handbag choices so that I can carry my insulated coffee cup around after its been emptied!

The bottom line is that I am loving the train travel, even without considering the money or carbon saved. So from next week I’ll be using the train for travel north into Barnstaple and I’m ready to consider the next change to make.

Lucky Escape?

Just before Christmas a consulting firm that I had previously delivered some training for went bust. This was totally unexpected: the firm seemed to be doing well and had lots of new projects planned for 2020, but it was part of a bigger group and it appears that all was not well elsewhere in the group.

Obviously this was a tragic development for the staff who lost their jobs a couple of weeks before Christmas. In conversation with my contact just after the news she told me that she was impressed that I had insisted on invoice being paid promptly and therefore escaped being caught up in the insolvency.

I didn’t think too much of it at the time – the training was delivered in October and we had agreed that payment would be made during November – but her comments got me thinking.

Managing credit is always a challenge. In reality terms are often dictated by the customer and if you want to retain the contract you have to comply.

Once the product or service has been delivered it is difficult to apply pressure if payment is not forthcoming, even if you have included wording in your contract which states that goods have to be paid for before ownership transfers. Many businesses that I have encountered don’t even create a contract before they start supplying.

I am not bragging here about having escaped a bad debt; I firmly believe that this is more about luck, but in reality the only way to reduce your risk of not being paid is to be prepared.

Start out as you mean to proceed
Have a contract or at least terms of sale which outlines all of the responsibilities of both parties: it doesn’t need to be seriously legal: you could use an industry standard template but depending on what’s at stake it may make sense to speak to a solicitor.

This will cover the basics of what you’ll deliver and when, how much you’ll be paid and when, but also you might like to think about the worst cases of what could go wrong and what you’d be liable for if that happened. Are you planning to charge interest if you are not paid on time? What should happen if either party wants out of the contract – notice periods? reasonable compensation?

By setting out these points in advance (and highlighting them to the customer) you set the right expectations for your trading relationship, and you protect yourself against future issues, however unlikely they seem now. Crucially in the case above, my terms actually required payment at the end of October – so I was able to enquire about payment promptly and refer to the contract that the customer had committed to.

Unfortunately, having a contract alone doesn’t ensure that customers will pay on time. So what can you do to give yourself the best chance of being paid?

Make a conscious decision to give credit
Do you want to give your customer time to pay you? Wouldn’t the money be better in your bank? It may be common practice to offer credit, but that doesn’t mean that you need to offer every customer unlimited credit, for an unlimited period.

It is worth doing some research to ensure that the customer is who they say they are (identity theft is not just confined to individuals) and that they have a trading record that supports your faith in giving them goods without payment. At this point (when they want to buy from you, but haven’t got the goods yet) you have more power to ask them for accounts and supplier references “just for admin purposes”, so create a credit application process and follow it!

Follow up references and look for credit checks. This is not fool proof, it’s all historical information, but it can provide useful background and potential negotiating information.

Setting credit limits can be a useful tool in ongoing trading relationships – if you enforce them. Regardless of what payment terms have been agreed if you have decided that £5,000 is the maximum limit of credit that the customer can have, then you should not allow them to have more than that.

More importantly than anything else never give more credit than your comfortable with to a potential customer purely because they represent a “high profile” or “prestigious” opportunity. They may present marketing capital but what you need is money in the bank!

Keep good records
To keep on top of customer credit you need to have up to date information – how much has been sold, when payment is expected and the current outstanding debt. If you can’t trust the figures you have you will never be able to chase up payments with confidence and you may well miss warning signs.

As well as giving you information to use to control the risk of not being paid on time, up to date records also allow you to automatically send statements and payment reminders promptly – a simple and easy way of ensuring customers know how much is outstanding on their account.

Establish a relationship
In my experience the best way to ensure invoices are paid on time is to build good relationships with whoever pays the bill at the customer end. Whether this is the customer themselves or a member of their team, being friendly and helpful pays off.

For example, if you’ve given a new customer 30 days to pay why not call up a little while after the first invoice has been sent to introduce yourself?

Check up that you have the correct address details and that they have your bank details. You could try to find out more about how their system works: when should you expect to receive payment? How often do they make payments? (one of my clients pays everything on the 10th – chasing ahead of that is a waste of time)

This will help you feel more confident and if there is an issue it will be easier to find out about it and correct it.

Sometimes things will go wrong and there are not always warning signs, but if you have set up an easy to follow system that keeps you updated you can reduce the chances of being left with a bad debt and my favourite tool for improving cashflow. If you would like to enhance or review how you handle customer credit then drop me a line.