Updated: Fri, 18 Dec 2009 17:51:51 +0000 by alsters456

Businesses in Coventry and Warwickshire are being urged to keep their focus on getting in their cash, as the region shows tentative signs of pulling out of recession.

 

The advice from Coventry and Warwickshire lawyers Alsters Kelley comes as firms with healthy order books are still failing because they do not pay enough attention to being paid.

 

Geoff Brooke-Taylor, a partner in the firm’s Company and Commercial department, says that surviving the downturn is relatively easy; surviving the upturn will be much harder as orders start coming in without the accompanying money.

 

“One of the biggest single reasons firms go bust is because they run out of cash,” he said. “It is not that their product or service is lacking or that they do not have a large stockpile of orders. Cash and, more specifically, cashflow is what really matters.

 

“The key for any firm is to have systems to ensure the money comes in faster than it goes out and there are four areas to concentrate on.

 

“At the core is the relationship your business has with your customers. Check their ability to pay by using a credit checking agency and making enquiries of other contacts where appropriate.  It is also very important to make sure that you are entirely up-front about what the customer will be getting from you in terms of delivery, and be clear about the price. The strength of the personal relationships between the parties will dictate whether you can extend terms, for example, if you have sufficient confidence in them.

 

“Terms and Conditions lie at the heart of the business relationship but many people do not review theirs often enough. Your Terms should ensure that you can stop supplying goods or services if any payment is late; in some types of business you can retain the legal ownership of goods sold until you have been paid in full. There may be issues with ensuring that it is your Terms of Business that govern the sale.

 

“Efficient administration is vital. Bill consistently and assign someone in your business to chase up any late payments. Clarity and consistency are key to this process. There is no point going over the top in demanding payment and then not following it up.

 

“And, if all else fails, look to legal redress. The mere threat that comes from a letter on a solicitor’s headed notepaper with a threat to commence proceedings can often jolt the reluctant payer. But, it is also important to consider how you might take things forward if that produces no results. There are different court procedures which suit different circumstances.”