Why are we scared about asking to be paid?
Ask most employees what they grumble about and ask their employers about most, and it’s likely to be getting their pay cheque on time.
Yet when we create new enterprises, we suddenly seem to lose this boldness and capitulate to our customers when they’re late in paying our bills and invoices to them – to the tune of over £62 billion for small businesses!
So why this change in attitude over money between being an employee and being an employer?
I have a suspicion it’s about fear.
We’re frightened that if we appear pushy, our customers won’t come back or, even more damningly, our customers start to think: “If they’re so desperate for our money, then they must be in trouble, so better take my business elsewhere”.
So what do we do?
Well, for starters, let’s be more open about talking about money and getting paid – raise it as soon as we can as part of negotiations with customers and clients.
Be clear about when they want to pay and when you want to be paid from the outset. Negotiate, haggle, and agree compromises. After all, we do that already over the price and delivery schedule, so why not the payment terms?
Plan the cash flow: so many businesses fail because they run out of cash before they get paid – I’ve seen it happen, including to a business that was making more than £1 million profit annually (I helped their employees subsequently buy-out the business).
Finally – don’t forget the easy stuff: there’s a lot of legislation you can use to support you asking to be paid.
The biggest (and least well known) being the Late Payment Act which says that as a small business, you can charge interest on what you’re owed if its late in being paid. And after all, it’s not you that’s chosen to charge interest: it’s the government and their legislation... so no risk to your personal relationships.
I’ve used it a number of times and on each occasion got paid more promptly and had that client/customer book me for further work.
Simple things that, with a bit of thinking and planning, can make all the difference to getting that overdraft reduced and staying in business.
Or maybe there’s something about ‘being British’ that means we like being owed more than £62 billion and not being able to cash it?
Adrian Ashton, business advisor and trainer, Pennine Lancashire Enterprise Trust and www.adrianashton.co.uk