MEMBERNEWS
Don’t get knocked down by the domino effect
Business closures are an inevitable impact of Covid-19 – but these collapses don’t occur in isolation, as when one business falls, others are likely to tumble with it. Many will be profitable, well-run businesses that simply get caught up in the “domino effect”, where their customer, or their customer’s customer, gets into financial difficulty and, before they know it, everybody in the supply chain is impacted. Ian McKellar (pictured) director of credit management agency Overdue Invoices, explains how to avoid the pitfalls of credit.
A domino effect or chain reaction is the cumulative effect produced when one event sets off a chain of similar events. This isn’t a new phenomenon.
Commerce has always had peaks and troughs and whenever there is a downturn there will always be winners and losers. However, the big difference here is that historically these challenges usually have a more pronounced impact at a local or regional level, whereas this crisis is likely to have an impact at a global level. How do you protect your
business from the domino effect? You need to minimise the risk by being more prudent.
CREDIT TERMS Firstly, you need to realise that when they offer credit terms to
your customers, you are effectively acting like a bank. Many companies, particularly
SMEs, are so excited about winning big orders or contracts, they forget that in many ways this is no different to offering an unsecured loan. Have you ever thought the reason
you won that big order was because your competitors weren’t prepared to offer extended credit terms? Make sure your payment terms
are absolutely clear and have been agreed in writing with the client. Remember that just because the
customer is asking for 30 or 60- day terms, it doesn’t mean you have to agree to them and these are negotiable. There is no reason why you can’t demand seven or 14-day terms –
better still get them to pay on a pro-forma invoice.
CREDIT CONTROL Have strict credit limits in place and don’t be seduced by the promise of that next big order. This can cause friction between the sales team and the finance department. Request a purchase order for the
goods or services you are providing, which mirrors your credit terms. Contact the customer before the
invoice payment is due to ask them if there are any issues with the invoice and re-affirm the date on which the payment is expected. Chase the invoice payment as
soon as the invoice is due. Please remember it isn’t rude to chase a late invoice – in fact it is much ruder for the customer not to have paid by the mutually agreed date.
OVERDUE INVOICES Once an invoice has reached an unacceptably late stage (only you can determine when that date is), then your options are as follows:
Head in the sand approach: Keep your fingers crossed and hope that you eventually get paid.
Definition of madness approach: Keep chasing the debtor the way you have always done, even though it isn’t getting the desired outcome, but expect a different result this time.
Pass to a third-party credit management agency: This sends a serious message to the debtor, which significantly improves your chances of getting paid quickly and the relationship can be preserved.
Instruct a solicitor: Expensive, not guaranteed to win and can damage the relationship with the client.
Issue court proceedings yourself: Time-consuming, not always successful and will destroy the relationship.
Overdue Invoices can support as a credit management agency and is offering Chamber members a free professional collection service on overdue B2B invoices. For more information, contact Ian McKellar on
ianm@overdueinvoices.co.uk
1284 Ltd to support media firm Pukaar Group
1284 Ltd marked the anniversary of its first six months in business by announcing that it will provide consultancy services to Leicester media organisation Pukaar Group. The Loughborough-based
communications strategy firm announced in January that it will look for new ways to tell the story of the loyal and engaged audience Pukaar Group has cultivated since being founded in 2010. As well as publishing Pukaar Magazine, Pukaar Group hosts
12 business networkMarch 2021
high-profile events, provides digital marketing services, and supplies broadcast journalism to national and international media. 1284 Ltd was founded in July
2020 by former Leicester Mercury editor George Oliver (pictured). George said: “There’s been a lot
of learning since launching the business and I have been grateful for some wise and practical advice and support from people and organisations throughout the Leicestershire business community.”
The business was officially launched in November 2020 with a sold-out event at Leicester Business Festival which George co- chaired with former East Midlands MEP and Leicester deputy mayor, Rory Palmer. Since it launched last summer,
1284 Ltd has been providing informal communications advice to several graduate start-ups. It is also acting as consultant to three established Leicestershire organisations.
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32 |
Page 33 |
Page 34 |
Page 35 |
Page 36 |
Page 37 |
Page 38 |
Page 39 |
Page 40 |
Page 41 |
Page 42 |
Page 43 |
Page 44 |
Page 45 |
Page 46 |
Page 47 |
Page 48 |
Page 49 |
Page 50 |
Page 51 |
Page 52 |
Page 53 |
Page 54 |
Page 55 |
Page 56 |
Page 57 |
Page 58 |
Page 59 |
Page 60 |
Page 61 |
Page 62 |
Page 63 |
Page 64 |
Page 65 |
Page 66 |
Page 67 |
Page 68 |
Page 69 |
Page 70 |
Page 71 |
Page 72 |
Page 73 |
Page 74 |
Page 75 |
Page 76 |
Page 77 |
Page 78 |
Page 79 |
Page 80 |
Page 81 |
Page 82 |
Page 83 |
Page 84 |
Page 85 |
Page 86 |
Page 87 |
Page 88 |
Page 89 |
Page 90 |
Page 91 |
Page 92
