30 Days To Neverland (Cheque In The Post)

One of the biggest challenges facing smaller and start up businesses is the issue of when and how to ask for payment after the sale has been made.

And when and how to chase an invoice when it’s overdue is another awful dilemma to be faced with.  Most companies are started by entrepreneurs and they usually have more sales or techie skills than admin or finance chops.

Judith always says that an accountancy business was the worst for this; you do all the work, and present your invoice, which often arrives just after the bad news that the company is not doing as well as it could, or the tax bill is higher than expected or planned for.

One of my favourite bank managers once told me, when I asked him what one thing did he think I needed to know that possibly I didn’t know, that he had seen many highly profitable businesses fail due to bad cashflow management and defaulting creditors.  So I went on a hunt to find the best way to manage cashflow and that turned out to be a simple excel spreadsheet, given to me by Greg Ballard.

The Money Gym got around this issue in the very early days by making the decision to only accept customers if they pay up front (and offering an incentive for them to do so) and then we made that conversation very easy for us and our customers by putting all our payment conditions on our website – unusual for a coaching company in those days – and by only taking payment online.

But we know, from talking to our business orientated Money Gym Gold clients that sometimes that is so far outside the industry “norm” that it’s unfeasible.  Also, I’ve just been taken on by Pampers as their official wealth coach, and their PR company will not consider payment in advance of my fulfilling my new duties.  But you can bet your bottom dollar I’ll be all over my invoices like a rash especially in the early days!  I value my time too much.

One option that is often recommended is to consider a factoring or invoicing discounting company, but this is often seen as a last resort, and is not ideal, as many organisations will now not deal with them.

A different approach was brought to my attention by the excellent ezine sent out by Mike Southon, The Beermat Entrepreneur, which mentioned Cashflow Protector from the Cashew Group. Marketing Director Alan Smith says that the problem is that most sole traders and small businesses do not have the patience or skill set to chase their unpaid invoices in an organised way.

Cashflow Protector offers a web-based service enabling you to register your unpaid invoices on-line, and then for a low monthly subscription rather than a percentage of the invoice value, they will chase your invoices for you. Smith claims a 97% success rate for their customers. Cashew Group also offers legal cover to protect against the very bad payers.

You can find out more at http://www.cashewgroup.com – this is not a recommendation as we haven’t had personal experience ourselves, but it looks like a great resource for business people.  Do come back and use the comments box on this blog posting to let us know what you think, if you use them.