10 April 2008
Suppliers should chase payments from buyers in challenging economic conditions, according to the Institute of Credit Management (ICM).
In a leaflet issued to small businesses, called Combating the Crunch, the ICM offered four tips on managing cash flow with the threat of an economic downturn looming. One point stated: "Don't be afraid to ask for payment - it's your money."
The ICM advised suppliers to make immediate contact and be assertive with a customer if payment didn't arrive on time. It also encouraged vendors to explain the consequences of non-payment and follow up on promises of money being paid to them.
The three other tips urged suppliers to get to know their customers before entering into business with them, ensure payment terms were clear before any transactions were made and to check invoices were accurate.
Philip King, director general of the ICM, said businesses need to maintain cash flow under increasing economic pressure. "If payment terms are agreed in a contract they should be met.
"It's not contentious for a supplier to ask for their money."
Simon Briault, spokesman for the Federation of Small Businesses, agreed but said it can be difficult for vendors to strike a balance with customers. "It puts suppliers in a vulnerable position, they won't want to put big companies' noses out of joint by asking for prompt payment for fear of losing business."
He added: "The financial climate is not dire for suppliers at the moment, but they are preparing themselves in the anticipation of harder times over the next two years. A lot of small businesses are taking the time to re-evaluate the way they operate by striving to cut costs."