And what can the biggest strongest companies do to help?
In a Crisis some people take advantage and in business it’s often the same.
Let’s hope Corvid19 brings the best out of big business.
A lot of SME’s will say they have always had to ‘rob Peter to pay Pay Paul’.
It’s a sad fact that some large businesses have been allowed to dictate payment terms and this has become a common and huge problem for the SME. ‘rtfacts payment terms are 30 days or less please’ but if you win a big new customer and their terms are 60/90 days, what would you do?
We have been fortunate to have a lot of great clients that pay on, or before due time which really helps. One lovely customer, Memorials of Distinction, paid an invoice in 30 seconds, a record that will never be beaten I’m sure, unless our invoice lands more perfectly than it did that day, as he was on the bank website just as it pinged in!
30 day payments or less should work for everyone, but we’ve worked with some giants – Nameless as I’d rather not get sued, that aren’t such great payers! Lovely people to work with, and great high profile work, but the payment side is really poor.
Prompt payment from the likes of them would transform good little businesses into great little businesses.
To be fair BT pioneered this practice back as far as 1993 and it was them that really put rtfacts on the map. Their money allowed us to prosper and grow and become a great little business.
So what’s the actual problem?
If the work we’ve done is outsourced, like print, photography, illustration, copywriting, or web development, those suppliers want paying monthly and we want to pay them, that’s how great relationships are built, (and its how we all feed our kids), so we are sometimes forced to use the money paid promptly by other clients, to fund the projects weve worked on for slower payers. Any discrepancy quickly becomes a cash flow crisis which has to be managed. Borrowing money since the crash is a heart in the mouth process and today, an impossibility!
Try and talk to your bank – be prepared for a very lonnnngggg wait and a very negative answer if you ever get through.
If SME businesses get into trouble and Corvid19 isn’t helping, paying supplier/partners on time becomes even more impossible and then the failure writing is on the wall. SO, we need to get back to proper business models that work for us all and not just the big boys holding all the cash.
The supermarkets have a terrible reputation for paying bottom dollar and paying very slowly. (We don’t work with any, so this isn’t personal experience), Big cash rich businesses need to lead the way. If the big companies with all the money, get the money moving down the food chain quickly, cash flow is improved and more businesses can weather the odd financial blip.
It’s a big ask. I’d put money on the fact that every FD in the land is telling their financial teams to ‘hold on to our money’, BUT that will kill the myriad of SME’s that have supported them and contributed to their success over the years, so its pretty short sighted and tough to hear if you’re on the recieving end.
And its not just the big boys that are to blame! SME’s are our own worst enemy, chasing the money and pushing costs to rock bottom, in an attempt to beat the opposition into submission, hopefully before we all go bust! We must not commoditise professional services, be confident in our ability to change businesses for the better and be prepared to talk to the big companies and ask for prompt payments. It’s amazing how well they respond and this has worked for rtfacts.
I’m really grateful we have such a great bunch of clients in this difficult time, THANK YOU ALL. AND In the spirit of supporting each other, please follow this link and subscribe: Let’s Talk?