Chase Late Payments to stay Competitive
The advice comes in the wake of a survey showing that almost half of small businesses are increasing their prices to customers as they pass on their own rising costs from fuel & energy price hikes.
The research, published by telecoms company Unicom, found that 44% of 350 small businesses polled said they felt they had no choice but to raise prices.
“Unfortunately, small businesses are no different from any other firms and in these difficult times are having to raise prices to make ends meet,” said Federation of Small Businesses (FSB) chairman John Wright.
However, he advised members to do their best to try to keep prices down by spending more time pursuing late payments, seeking out the best deals on overdrafts and bank loans and trying to manage their costs by diversifying.
The construction and retail trades are being hit particularly hard, with new home–building grinding to a halt and retail sales & consumer confidence reported to be falling. Figures also show that the UK’s manufacturing sector shrank in July at the fastest rate for almost a decade as rising costs and falling orders took their toll.
Julia Evans, chief executive of the National Federation of Builders, said building firms needed to take firm action to stay afloat.
“There is huge pressure on small and medium–sized construction firms,” she said. “Fuel costs have hit them hard and there are rising material prices. There is a vice–like effect on builders because customers, too, are being hit by rising food and fuel costs and they are looking for cheaper deals.
“You should run a slide rule over your books and demand payment the moment it is due,” she said. “Cash is king and you must chase down late payments. Carry out proper credit checks on customers and make sure you have a firm contract in place to ensure the specification of a job doesn’t change once you start.”
Shane Brennan, public affairs director of the Association of Convenience Stores, admitted there was only a limited amount small retailers could do.
“Think carefully about what the burdens are on the business and plan for the longer term,” he said. “Overall, though, it’s about battening down the hatches during this period. There’s no magic answer.”