They say that money is what makes the world go around. This means that if money stops flowing to your business, there is a chance your world will come to a halt.
If you don’t take precautionary measures, your bad money management could be the problem of someone else. But it is important to do so correctly and try to avoid offending anyone.
The following five steps can help increase trust among your clients, suppliers, and customers when it is about payments.
- Credit check
Before you partner with a client, make sure to do a credit report to assess their ability to repay your debt.
It is well-known that anyone can request a personal credit report. However, Australian organizations can get information about the credit history of individuals or companies.
- Invoice properly
This includes how you create an invoice what you should include the various types of invoices as well as other information such a when you need it to be sent to the client.
You must also make sure you have a solid system in place for tracking invoices. Research shows that SMEs across Australia are collectively owed $26 Billion and almost three-quarters of all business invoices are paid late.
If you sell goods on credit, you are at risk for bad debt and non-payment from customers. This can impact your cash flow and could leave you broke.
Trade credit insurance Australia will protect your income and business against possible customer bankruptcy.
- Debt Recovery
Every so often, a tardy payment can lead to a “debt recovery situation”.
There are still steps that you can take to solve these problems.
A recent legal review should have been done on your terms of business. It might include retention of the title clause that will not be removed until you receive payment. You might consider adding a charging clause to your terms of business that applies to all or a part of the customer’s assets. Once you have registered the Personal Property Securities Register you will be able to register it as a secured debtor. If the company has small net assets, it might be worth getting personal guarantees from your corporate customers.
- Scam alert
Recently, scammers have been using fraudulent businesses to request clients to pay a bill into a new account. The account turns out to be that of the scammer.
To help you maintain good relationships with clients, to make sure they are aware of these scams, and to ensure that they never ask you to change your payment details, tell your clients that you will only do so if your direct directives are clear and concise, and you can do it both over the phone as well as in writing.
Many of these scams are now being committed through digital channels. That is why you need the right cyber insurance. As technology becomes more important for businesses, so do they.
- Insurance options
However, as with everything in life, you can make every effort to avoid getting into trouble but it’s possible to get lost.
ASIC reports indicate that nearly half of all business bankruptcy cases were due to insufficient cash flow.
Insurance is an option that can protect businesses from bad business debts that could bring down your business.
Credit Insurance is a way to ensure that your company can continue trading even when clients or suppliers don’t pay.
A combination of Business Interruption Insurance and Business Insurance can protect your business and help you to get back on the road in case of disaster.
Ask your steadfast agent for more information about insurance options.