30 Sep Getting Paid
Getting paid
Just in case you haven’t noticed, the economy has entered very shaky ground. Thus far, the effects have been unevenly distributed – some industries have benefited while others now find themselves on struggle street.
One of the anticipated outcomes is that a larger than usual number of people/businesses will default on debts, and if you’re in business, this can present quite the issue.
There is a real risk in extending credit to those in financial hardship, and we suggest that you should be keeping a very close eye on your receivables. We’re not saying you shouldn’t be lenient to those under financial pressure, but we are saying before offering leniency, it is important to understand how you will get paid. The risk is that you end up out of pocket like these guys.
What if the shoe is on the other foot?
If your business is facing financial pressure, it is an uncomfortable place to be. But putting your head in the sand won’t help. Here are 3 things that you can do:
- Understand your cashflow – when will you get paid and how much?Who do you owe money to and when is it due?What is the order of priority for making payments?Can you grind through it, do you need a shot of working capital, or is more drastic action required?
- Make the tough phone calls – if you’re overdue with paying suppliers, front foot it and contact them.Explain the situation and outline what you’re working on to right the ship.Not only is it the decent thing to do, but it might be the difference between a supplier standing beside you or deciding to walk away at a crucial time.
- Have a line in the sand – knowing when to escalate your response or when to ask for help can be difficult; but if your position is worsening and you’re not sure what to do, the sooner you seek advice, the better.
