You’ve just won a new client following weeks of hard work, research, budget considerations, strategic development and competitive pitching. There’s a temptation for SME owners to get caught up in the excitement of working on new project but it’s important to fully review the client, and their financial history, to ensure new customers have the funds to pay you, they don’t have a negative credit rating and so you don’t end up spending valuable time chasing missed payments.
Making sure you start off with all the right information about your new customer ensures a healthy and beneficial working relationship. Paul Haydock, CEO at DueCourse, offers insights into the things SME owners must do to protect their business when taking on a new customer.
- Make sure to check their credit ratings and look out for details of over-extended credit limits – you don’t want to provide £30k worth of work for a brand new company with a credit score of £500.
- Issue contracts and terms and conditions documents and ensure they are signed and returned before any work commences.
- In the early days, conduct a ‘client expectations’ session to agree realistic deliverables, deadlines and targets as well as channels of communication – too many client relationships go sour as expectations are mis-aligned from the start.
- Confirm budgets for agreed projects and any additional services.
- Start as you mean to go on – agree invoicing dates and confirm who is responsible for transferring / managing payment and set deadlines and reminders for when funds should land in the company bank account.
- Make sure you send out your invoices on time – administrative tasks such as issuing invoices may not be high on your priority list when you are in the throes of a new project, but set aside time every month to update your records, send out invoices and monitor for payment.
- Do your own research into the company, founder and previous business they have worked with and ask fellow entrepreneurs for their opinions.
- Stick to your word and make sure you deliver the services you have promised, reviewing weekly or monthly to pre-empt and adjust any issues – and where possible, over-deliver to impress your new client in these important early stages.
- Take time to listen and be proactive about communicating openly.
- Look into third party support and organisations that can help you source alternative finance from unpaid invoices in the short term to cover delays to payments.
- If you feel unsure or unclear about any aspect of their business / financial information, make sure to ask questions early on.
It’s important for businesses to remain pragmatic and practical when working with new customers and not be afraid to set out their terms and conditions. Late payment is a problem that affects thousands of SMEs each year and 48% of small to medium sized businesses are frustrated with delayed payments and how this negatively affects their ability to operate effectively and efficiently. SME owners should aim to avoid this issue where possible and address any potential issues in the early stages of working together to reduce the risk of cash flow problems.
Starting off on the right foot can pay off
Red Cow Media, a digital marketing agency based in Manchester, is one such business that when faced with upfront advertising spend of six figures at the start of a new client campaign, sought to find a short term and flexible solution that didn’t require the use of business capital.
Managing director of Red Cow Media, Kelly White, says: “By virtue of their contract and project types, some large clients are on 90 day payment terms. This means that where we have to pay for advertising costs upfront on platforms such as GoogleAdWords, AdRoll or Facebook to launch a campaign, the cost is covered by us, not the client, for those three months.
Kelly found alternative finance provider DueCourse through a referral at a networking event.
“DueCourse was able to unlock the cash in our unpaid invoices simply and speedily, without excessive paperwork. Thanks to its cloud-based technology, which linked seamlessly with our online accountancy system, the money was in our account within a couple of hours and we got the project off the ground quickly and to the usual high standards without removing capital from the business for a long period. It was invaluable for these larger scale projects where we don’t want to take the cash hit, but need to maintain outstanding, results driven service levels.”
DueCourse is a rapidly expanding invoice financing service for British SMEs. Its smart-lending technology allows SMEs to fee the cash tied up in unpaid invoices to help finance growth. The software is free to install and can be used with all online accounting packages in the UK.
To find out how DueCourse can help your business, visit www.duecourse.com.