Have you hit that wall? The wall that most entrepreneurs hit at some point where they feel that they are facing struggles they just can’t overcome when running a business. Our customers share their experiences of running a business with us and we have found that the below four are some of the most common problems entrepreneurs come across.
- I’m not getting paid on time
Many businesses struggle with late payments, unfortunately this is a growing trend within the UK business economy. If you aren’t paid on time then your business could suffer. There are a few things that you or your finance team can do to help payments come in on time.
-Send invoices out on time and correct. Before sending out an invoice, always double check to make sure they are correct. This could mean calling the customer to check that you have the right information for them and introducing yourself. Customers are more likely to pay if you have a personal relationship with them so try to build up that connection and make sure your invoice reaches them around the same time every month. This way, they will learn to expect your invoice and get into a habit of paying at a certain time of the month. If an invoice is incorrect, it will need to be returned and corrected; slowing down the payment process.
-Offer incentives, discounts or deals to early payers. Many companies offer these as a way to get payment through the door. For example, if your customer pays upfront, give them a discount on their next order. Everybody loves a bargain and some people will happily part with their money sooner rather than later if it means they will get something back in return.
-Monitor your customers. If you monitor your customers’ company credit reports, you are able to view their payment trends. You can find out how long they take on average to pay their bills and if their payment behaviour is getting better or worse. By keeping on top of this you can figure out when to expect payment and forecast your cashflow to accommodate this. If a customer is consistently getting worse at paying their bills you can revisit their contract terms before getting your fingers burnt by an unpaid invoice.
If you are having difficulty chasing late payments, read our latest blog post.
- Funding is difficult to get
A lot of businesses need funding when they first start out, or even funding to expand and the UK government has put aside funding for small businesses and start-up. Remember, your bank isn’t always the best option for loans or funding, doing your homework and getting some free advice about where your funding could come from is always worth it. Also, it is worth checking out your company credit report. Like a personal loan, if you are asking for funding for your business your company credit report will be checked. If your company credit score is low, take action to build it up. Organisations won’t pay out to businesses if they feel they won’t be able to pay it back. Pay your bills on time and try to manage your cashflow in order to keep your business stable. The more stability and the better company credit score, the more likely you are to get accepted for loans or funding. Visit the gov website for more information.
- My cashflow is unstable
An unstable cashflow could be the first warning signs of trouble in your business. If money isn’t going in and out properly it could have a knock on effect. For example, if your invoices aren’t paid on time, you could struggle to pay your own bills on time. Analyse your outgoings and balance your books; make sure there is nothing on your outgoings sheet that you could do without. Living below your means is a great way to cut back on outgoings, leaving you more money in your rainy day fund. Keeping on top of your invoices is also very important. Chase invoices if they are late and keep on top of your accounts.
- New business is slow
Every business has ups and downs when it comes to getting new business through the door. Sometimes it’s not only your efforts but also the circumstances of your target market that can slow trade down. For example, during the summer months a lot of people take holidays, so speaking to a decision maker could prove difficult. If you are struggling for new people to send your marketing efforts to, Creditsafe offer Marketing Data that has already been pre-credit checked. You can narrow your market down using over 22 different filters and be sure that your marketing material is reaching the right people. Revamping your marketing campaigns or changing your usual approach could also be a good idea.
If you need any other help or advice, take a look around our blog or visit our website, www.Creditsafeuk.com