Everyone seems to be holding onto their money for as long as possible and for creative SME’s who are often at the bottom of the food chain this can spell disaster especially as clients tend to be much larger businesses.
Here are a few tips for starters:
Prospective clients: Credit check them. Set credit limits and don’t increase them unless they have demonstrated that they are good payers.
Existing clients: If the time taken to pay has increased or if you have any other reasons to doubt their financial health, credit check your clients and act on the information. There are some classic signs of impending doom to look out for that you can monitor discretely.
Don’t be afraid to be as professional with collecting from clients as you are in your other dealings with them.
Understand your clients’ payment procedures and make sure you are in a strong position by having purchase orders, terms and conditions etc.
Sort out those who can’t pay from those who won’t pay and act accordingly – be realistic with the former and tough with the latter. Litigate if necessary – there are some very good debt recovery firms out there.
I’m afraid many architectural practices are so afraid of offending clients that they will end up writing off fees because clients go bust…and then end up going bust themselves.
Are you going to let this happen to your firm?
Engage in the debate with financial management advisor John Toppin MA FCA and strategic advisor and business coach, James Cooke.
John Toppin is a specialist consultant finance director and ned for marketing,creative and professional firms.
You can check my credentials at http://www.linkedin.com/in/johntoppin
You can read my personal blog at http://finance-director.blogspot.com/
John Toppin at www.nomizon.co.uk
James Cooke at www.jamescookecoaching.com