Poor Cash Flow – the Death Knell for the Small Business?
In its simplest form, cash flow is the life blood of the small business. It is cash flow that keeps a roof over the head of the business, which ensures stock on the shelves, petrol in the car, food on the table… in short there is no aspect of any business that does not require a healthy injection of cash flowing through the corporate veins of the company.
That being said, why is it that a large percentage of small business owners across the UK appear reluctant to chase monies owed? When the landlord demands the rental for the your premises you pay up accordingly, when suppliers submit their invoice you do your best to pay up promptly yet why do we stop short of demanding timely payment for our own goods and services?
Actually, this blog relates more to the service industries as it appears to be for services rendered that we are less willing to address the elephant in the room that is the tardy paying customer. To overcome this problem many small businesses elect to outsource credit control to A.N. Other, who can conveniently double up as a faceless scapegoat as well as a money gatherer for the organisation. As such, they are probably worth their percentage taken although for one-man/woman operations who provide a service, a timely invoice with payment terms clearly explained should be enough to elicit cash from the hand of the service user to the coffers of the provider of same. Sadly it appears not.
When the service is delivered within timescale it is only polite – nay, professional, not to mention ethical– to pay up on time. Service users who go to ground when the time comes to pay the piper come around are all too common. That is not to say they don’t pay, they do; just not quickly enough, creating a turgid cash flow slow situation for the small business.
UNFAIR! I hear you cry and indeed it is. The trouble is that as small businesses we are too nice. We work many times harder than larger companies to keep our customers happy and to deliver a high quality service whilst being jostled to the end of the queue when it comes to paying bills.
For my own part, I am as guilty as the small businesses I represent in this article. The last thing one wants to do is to –shock horror – upset one’s customers (even the slow paying ones) so we grumble on… hardly a solution though, hence this appeal to medium to large size businesses which use small service business – please pay promptly or you risk losing us in the arid desert of poor cash flow.
For my own part, I shall remember these days and when my business grows larger I will take my own advice and pay up on time. Won’t I…
