The uncertainty of the current situation surrounding coronavirus (COVID-19) is affecting businesses in a number of different ways. Despite the support offered by the Chancellor in last week’s Budget, many SMEs remain particularly concerned about the impact that the pandemic is having on their cashflow.

With a significant liquidity squeeze a very real prospect for businesses across many sectors of the economy, there are steps that leadership teams can take now to bolster their balance sheets and protect their cashflow:

1. Plan ahead

The situation is evolving rapidly so it’s important that you continue to have a good idea of where you stand amid all of the uncertainty. Keep updating your cashflow forecast as new information becomes available, and pay particularly close attention to your list of debtors.

2. Keep in touch

Stay in contact with your debtors to find out how they’re getting on and to anticipate any potential problems. Regular communication can also help bolster your relationship with your clients, which is particularly important at a time of financial stress. Our experience suggests that the old adage of ‘a stitch in time saving nine’ is particularly relevant when it comes to debtors, as a tricky conversation early on can prevent a potential issue from snowballing into something much worse.

3. Be firm

Make sure that you’re very clear in your conversations with debtors. If you’ve delivered on your side of the contract, the default position remains that you should be paid – and paid on time. Cash is king in the current economic climate, so try to resist the temptation of writing off (or waiting for) what you’re owed. It’s also worth remembering that delays to payments by your debtors could risk a knock-on effect further along the supply chain, as you may then struggle to pay your own creditors on time.

4. Be fair

The reality is that many businesses are going to face pressures on their cashflows over the coming weeks, so consider introducing some flexibility when dealing with some of your most trusted clients. If you have a good understanding of your financial position (see point 1 above) and have spotted potential issues early (point 2), you may be able to agree an alternative repayment schedule with some of your debtors.

5. And if you’re not getting anywhere…

If you feel that you can’t come to an agreement with a debtor, it may be time for expert advice. This is exactly why we created Escalate. If you suffer a financial loss because of late or non-payment, don’t automatically assume the costs of recovery outweigh the benefits. We’re already helping SMEs to recover £100 million that would have previously been written off, with a simple sign-up process, no up-front costs and a fee only payable if we get you your money back.

 

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CONTACT US

Contact Us to find out more about how Escalate can help your business.

Our registered address:
Exchange Station, Tithebarn Street, Liverpool,
L2 2QP

Escalate Law Limited
Company No: 10381993

The issue of late payments and other unresolved commercial disputes is rarely out of the news at the moment.  And for good reason.

Accounting software provider Xero estimates that SMEs have £131 billion tied up in late payments, while Pay.UK revealed that SMEs spend £4.4 billion each year collecting the money they are owed. Our latest survey paints a similar picture: we found that 96% of SMEs have experienced a bad debt in the past 12 months, with 60% percent stating that the late payments they experience are a serious issue for them; 42% believe that late payments put their business’ future at risk.

So the problem is well documented. 

But what about the solutions? How can we start to drastically bring these figures down? 

At Escalate, our focus is all about resolving late payments, bad debts and commercial disputes.  That’s why we’re helping SMEs to recover £100 million to SMEs which would have previously been written off.  So here is our advice on what to do if you face a late payment or bad debt:

Do your research
Get to know your client and invest some time in due diligence, whether that involves asking for references, undertaking a credit check or reviewing the client’s accounts.

Make your terms clear 
Agree expectations from the start. Many disputes arise from the fact that the parties involved did not take time to discuss their expectations at the start of the process. Clearly state your payment terms and other important points up front and avoid leaving any room for doubt later on. 

Document as much as possible 
Having a paper trail of important decisions can act as a reminder of the agreements made, providing evidence to bring both sides back on track. Comprehensive paperwork is also likely to help in a court case.

Address issues early 
The old adage that ‘a stitch in time saves nine’ applies here. A potentially tricky conversation early on can prevent a problem from growing in a complex legal case that will cost everyone time and money.

Understand the background 
Talk to the client to better understand the reasons for the issue. Building a relationship with the client may also provide them with an added incentive to prioritise your concerns.

Be firm but fair 
Your business is important to you, so nobody expects you to give in at the first sign of a disagreement. But don’t let your emotions cloud your judgements. Don’t make things personal. Step back and use an impartial observer, if needed.

Get an expert involved 
If you feel that the other party is unlikely to change its mind, it may be time for expert advice. This is exactly why we created Escalate. If you have already suffered financial losses, don’t automatically assume the costs of recovery outweigh the benefits.

If your business is struggling with bad debts, late payments or another type of commercial dispute, remember that there are solutions and writing-off should no longer be necessary.  Please get in touch…

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UHY Hacker Young joins Escalate dispute resolution platform

UHY Hacker Young in the North West, one of the region’s leading accountancy firms, has become the...

CONTACT US

Contact Us to find out more about how Escalate can help your business.

Our registered address:
Exchange Station, Tithebarn Street, Liverpool,
L2 2QP

Escalate Law Limited
Company No: 10381993