Companies Urged to Protect their Financial Health

With over 47,000 UK businesses teetering on the brink of collapse due to critical financial distress, according to a recent report – a 25.9% surge from the previous quarter – companies are urgently looking for ways to shore up their financial health. The report particularly highlights the construction and real estate sectors as areas of concern. Despite this, the festive trading season and the hopeful anticipation of falling inflation and interest rates offer a glimmer of optimism. Yet, these uncertain times call for immediate action to optimise cash flow, a crucial element for sustained growth and success.

One pivotal factor influencing a company’s financial wellbeing is the promptness of customer payments. Streamlining and expediting this process can significantly enhance cash flow, improve liquidity, and fortify business resilience. Here are ten strategies designed to help businesses accelerate customer payments.

  1. Clear and Transparent Invoicing

Ensure your invoices are straightforward and understandable, with itemised charges that clearly outline what the customer is paying for, including due dates and accepted payment methods. Transparency builds trust and can lead to quicker payments.

  1. Use Digital Payment Platforms

Leveraging digital payment solutions such as online payments, credit cards, and electronic fund transfers can drastically shorten the time it takes for money to hit your account. These platforms offer convenience to your customers and improve the accuracy of transactions.

  1. Implement Automated Payment Reminders

Automated reminders can nudge customers about their upcoming or overdue payments without seeming intrusive. Customisable systems can send out emails or notifications, helping to minimise misunderstandings and encourage on-time payments.

  1. Reward Early Payments

Incentivise customers to pay early by offering discounts or benefits for doing so. This can motivate them to prioritise your invoices over others, improving your cash flow.

  1. Establish Clear Payment Terms

Be upfront about your payment terms, whether it’s a net 15, net 30, or another timeline. Clear expectations can influence customer behaviour to match your preferred payment schedule.

  1. Build Strong Customer Relationships

A positive relationship with your customers can make a significant difference in payment times. Customers often prioritise payments to businesses they have a good rapport with. Excellent customer service and regular communication are key.

  1. Use Invoice Financing or Factoring

For immediate cash flow needs, consider invoice financing or factoring, which allows you to get a portion of the invoice value upfront. While there are costs involved, this can be a viable option for quick cash. Our partner, Moorfields Commercial Finance, can assist with these services.

  1. Leverage Technology for Invoice Tracking and Management

Utilise advanced software solutions for tracking invoices and managing accounts receivable. These technologies can provide real-time insights into the status of each invoice, enabling you to identify delays or issues promptly. Automated tracking systems can alert you when payments are due, overdue, or partially paid, allowing for more effective follow-up. This not only helps in keeping a close eye on your cash flow but also streamlines the entire invoicing process, reducing the likelihood of late payments.

  1. Negotiate Payment Terms Upfront

Before you begin work or deliver goods, negotiate payment terms that align with your cash flow needs. This could involve requesting a deposit or partial payment upfront, especially for larger projects or orders. Such arrangements can provide you with working capital before a job is completed and mitigate the risk of late or non-payment. Clear, upfront communication about these terms sets expectations from the start and can lead to more reliable payment timelines.

  1. Conduct Credit Checks on New Customers

For new business relationships, consider conducting credit checks to assess a customer’s payment history and creditworthiness. This can inform your decision on extending credit and on setting payment terms. Businesses may decide to require prepayment or tighter payment terms for customers with a history of late payments. While this approach requires a balance between due diligence and customer trust, it can significantly reduce the risk of delayed payments and improve cash flow stability.

Implementing these strategies involves a mix of clear communication, strategic technology use, and a focus on customer satisfaction. Offering a seamless and transparent experience for your customers can lead to more prompt payments, thereby streamlining your payment processes, enhancing cash flow, and laying a foundation for sustainable growth.

At Beavis Morgan, we understand the challenges businesses face, especially in turbulent times. We offer information and tools to help you navigate these challenges, and through our partner Moorfields Advisory, we can provide support for concerns regarding business viability. For tailored advice and solutions, contact your usual Beavis Morgan Partner or email We’re here to help you secure your business’s financial future.