Unfortunately according to some economists, we are going to be facing a recession shortly. This is bad news for businesses all over Ireland, as over 50% of businesses are already experiencing late payments (ISME Prompt Payments Report 21)
So how can you prepare your business cashflow and accounts receivable team for a recession? We offer 5 suggestions below:
1. Communicate with your Clients
Most successful businesses have some form of outbound communications strategy, and accountants should be no different. You have plenty to offer in terms of business advice, cashflow planning along with a broad view on various businesses. This communication is a vital link between you and your clients, it builds trust, and should help you get paid. If you don’t do it already, start now! A few simple paragraphs and the offer of help will be powerful in these difficult times.
2. Discuss Payment Terms Early
We are all happy to receive new business and clients, but it’s important that those clients can pay for your services. Our team recommend having the discussion about the payment of your fees, at the initial client conversation. This is more beneficial, rather than waiting until accounts are being prepared or filed. We have seen situations where clients are trying to collect 3 years of fees when the company is gone out of business.
3. Use Automation / Technology
There are numerous pieces of technology and software available that can be used to chase debts. It automatically follows up with clients, reducing the use of valuable staff time. At the very least we think a short succinct reminder every 2/3 weeks is reasonable, until the debt is paid.
4. Offer Various Payment Options including Installment Plans
In a recent study it was found that by offering payment options, some businesses saw a 50% increase in client on time payments, and a similar reduction in bad debts. Did you know..Many clients put off paying invoices due to the inability to pay an invoice in full. Getting something is better than getting nothing!
5. Use Getpaid.ie Electronic Direct Debit Services
Up until recently many of our customers have trusted clients to make EFT transfer payments, or asked them to set up standing orders. This is fine when the economy is flying and cashflow is not under pressure, but what happens when the client has to choose who gets paid? With Getpaid.ie the client is signed to a mandate, which goes to their bank account automatically each month to collect your money. This sets an expectation for payment with the customer and vastly increases your chances of getting paid for your services.
***Please Note: We are not a Debt Collection Company, but you can avoid using these guys, if you work with us : ) ***
Contact our friendly team in The Hatch Lab, Gorey, Wexford, or drop in for a chat and a coffee on us!
Phone: +353 86 2043415