Why should small businesses get advice on credit control?

We are a nation of small businesses and it’s something we’re passionate about.  Yet intelligent and engaging debate on credit control and small business is rarer than the Kakapo – our beloved owl parrot.  Native bird analogies aside, although we may not want to discuss it openly, credit control or ‘credit management’ as it’s sometimes called, is a bare basics necessity for any small business.   Here’s why:

Firstly, providing credit may mean you can do business with more customers!  

Secondly, if you don’t have a well thought out approach, you could find yourself in a world of hurt or face a financial apocalypse of sorts.   Unfortunately, the world of finance is something small businesses can struggle with as illustrated by an online survey from Westpac.

Instead of preaching credit control tips to a mass of 500,000 small businesses, it’s important to explain just why a small business should get credit control advice

4 REASONS WHY YOU SHOULD SEEK ADVICE

1. KNOW-HOW

Running a small business isn’t easy - there are some major challenges like staff management, business development and regulation.   As highlighted by Bob Weir from Pinpoint Business, there is a need for owners to accept they can’t be good at everything nor will they enjoy all the things they have to do.  

In our view, getting advice when it comes to credit control makes sense as it’s a specialist field.   Just as importantly it can also be a dry subject for those with an entrepreneurial spirit.  

While it may be tempting to take credit control half-heartedly or ‘leave it til later’, it’s far from prudent to do.  Financial challenges like debt and cash flow can cause hardship or a business to go under completely.   Sadly the stats on small business survivorship paint a grim picture:

Between 2007 and 2016, there were 490,275 failures – an average of 134 per day or 49,028 per year.  

• Only 26% of businesses that started in 2006 existed in 2016
• 36% of businesses started in 2006 with 1-5 employees existed in 2016
• 54% of businesses started in 2010 with 10-19 employees existed in 2016

2. AVOID NEEDLESS STAFF COSTS

Offering credit to customers will always involve staff costs.  Taking a DIY approach with a challenging process may mean you have to hire and train more staff for credit control, which can unnecessarily increase your overheads.  Getting advice may mean you are able to improve your credit management processes and therefore keep staff costs to a minimum.

3. IMPROVE YOUR BOTTOM LINE

Cash flow is one of the major problems facing small businesses today.   So what is the value of credit control advice when it also costs money?  Advice can help you establish a suitable credit management approach for your business, including how you do your invoicing, what to do when people don’t pay and how you communicate your credit terms.  All this can improve your cash flow as it maximises the benefits of giving credit while minimizing the risks.  

4. LESS STRESS, BE YOURSELF

One of the unfortunate things we see is the impact of non-paying customers on the emotional state of staff in small businesses.  Too often we see owners, accounts staff or credit controllers become so agitated and stressed they become a “different person”.  The good news is that it doesn’t have to be this way.  Good advice should allow staff to feel less pressure and anxiety since it will help reduce the uncertainty that exists in running a business.

GETTING ADVICE

If you are a small business and require credit control support, including debt recovery support, please enquire online or call us on 0800 229 267