Insights Blog

Useful tools, tips and strategies to help your business learn, develop and expand.

How To Settle Unpaid Invoices In 4 Weeks

Many of the businesses I have worked with in the last 9 years business coaching in London, especially those in service industries, have come to me with a bank of uncollected invoices. Some of them have even had debtors owing them for work that was done months, sometimes years, ago.

Chasing up invoices is probably one of the most tiresome, time-consuming and immensely frustrating parts of running a business. And it’s almost definitely not what you got into business for, is it?

After months of unanswered phone calls, voicemail messages and emails, you might get to a point where you decide it’s easier to give up and write it off rather than persist. This leaves you out of pocket for work that you completed – this leaves you without money your business actually earned. Alternatively, you could keep chipping away and trying to contact the client, but if that is not systemised, it usually means you are wasting time and resources that could be used on more important matters. Clearly, this is not the most effective way of managing your team and makes the entire process more stressful than it needs to be.

So, with this in mind, here is a simple four-week plan that we give our clients to ensure that the process of following up on unpaid invoices is organised to decrease the number that drop off, and increase the cash being paid back to you, without any unnecessary wastage of resources.

Week one

An invoice that is one week late could be due to a genuine oversight by the client, so it is important to just give a gentle nudge at this stage. The majority of clients will appreciate the reminder and pay it immediately.

A friendly yet firm email is sufficient, informing the client that their payment is now overdue, and asking them to arrange payment as soon as possible.

Week two

It is fair to assume that, if the client was going to read your email, they would have done so within a week. If they have not paid at this stage, they have either not seen your email, or have decided to ignore it.

The best thing to do is call the client (this can be done by a junior member of staff, as it is not yet an urgent matter) and ask them why the invoice has not been paid. Offer to help them with any issues that they might be experiencing.

Week three

If the invoice has still not been paid after you have spoken to the client directly, then the issue should be passed to a senior member of staff. The client may be disputing the invoice, or might simply need a more forceful push to encourage them to pay the debt.

You should send the client another email advising them that the matter will be escalated if the invoice is not paid within a week and that they can get in touch if they have any issues.

Week four

A senior member of staff should call the client directly if the invoice has not been paid by week four, providing the client has not contacted you to discuss any payment difficulties.

Note: if they have contacted you, you might decide to offer the client an extended deadline, or set up some sort of payment plan.

The senior staff member should make it clear that the matter is now serious and that, if the invoice remains unpaid, legal action will be taken.

It is rare that after this stage, a client will not pay the invoice. If they still do not pay, then you are likely in the realm of having to decide whether legal action will be worth it at this stage or not.

However, implementing this simple four-week follow-up process, or investing in business consultancy services to help you introduce the system, will mean that your business can streamline its approach to unpaid invoices. When we have seen our clients introduce this system, it has invariably saved them time, money and stress.

If you are struggling with even figuring out who has lapsed in payments – or you have so many that you need to figure out who to prioritise – check out this video on following up with aged debtors, where I go into more detail about how to set your Terms of Trade, map out your debtors, set targets, and decide who to chase first.

Need more strategies like this in your business?

Business coaches are here to help point out strategies that will be useful specifically to your business – like this one for following up on invoices.

Book a free strategy session with us and find out whether our strategies could be the ones that take your business to the next level.

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When Planning, Remember This Step

As a switched-on business owner, I am sure that near the beginning of the year, or the beginning of the quarter, you are in planning mode. You are crafting the strategies and tactics, and forming an action plan, to take your business forward in the coming months.

Most people when doing an exercise like this generally go in with a mindset of wanting a “clean start” or focus on setting resolutions. However, I think you need a slightly different way of thinking, which I explain in this video.

Prefer to read rather than watch and listen? No problem – here’s everything I said in the video as text:

Hi, this is Shweta from London Coaching Group, I hope you’ve had a great start to 2017 and you’re absolutely looking forward to the year. Now, just last week actually, our clients and my team and I, we were in a full day workshop. And the whole idea was, actually this was the workbook, so the whole idea was to spend time thinking strategically and also then planning the execution and detail for 2017.

The Importance of the Rear View Mirror in Strategic Planning

Now, there’s a very interesting section in this book, which is called “Rear View Mirror”, which is all about actually analysing 2016. You know, what went well? What what did not go so well, and so on and so forth. Now, we had to give some very important reminders to our clients when they were doing that exercise and I wanted to share that with you because I’m hoping that you are spending time thinking about 2017 and actually making plans around your strategy and tactics.

Now when you are doing that, people are generally in a mindset where they want to have a clean start, a new start, right? So let’s focus on 2017. But then my viewpoint is that we need to take some time to reflect about 2016 and that rush should not be there, at least for that reflection time. There are two main reasons why you need to go back in your past.

The Two Reasons for Reviewing the Past During Strategic Planning

The first reason, let’s talk about that, so the first reason that you need to go back to 2016 is for the learnings. You’ve had learnings in 2016. Both from your wins and from your failures, and it’s really important for you to identify those learnings so we can actually take them forward in 2017 in a positive way. So that’s the first reason.

The second reason that you need to go back to your past or 2016, is for the self-belief. And why that is important is because… think about it: again in 2017 you will have those moments of high demands, of pressure, you know the moments where you will have to excel, and when you look at the moments in 2016, when you’ve done the same. That gives you the self-belief, that gives you the confidence that yes, you can take on things and you can come out of it stronger and better.

So two reasons, remember. Only two reasons that you look back and you go back in your past. The first, to get learnings, and the second is to get self-belief.

So I really hope you will have a really good 2017 and you will have a great plan of action and good execution and in fact, on that note, if I may say that… Look, if you are open-minded to letting someone help you with your business, becoming even better, even stronger, even more efficient, then please feel free to reach out and just have a chat to explore how we might be able to help you. To help you actually make 2017 your best ever year yet.

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Reminders to reflect on your past is one of the ways we help our business coaching clients (and other business owners who choose to join us) at the Strategic Growth Intensive.

Join us at the beginning of an upcoming quarter and find out how our tools and systems could be helping you achieve double-digit growth in the next 90 days!

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How to Recognise if Your Business is Approaching Insolvency

Many business owners easily miss the tell-tale signs of insolvency. Whether you look after the finances yourself or employ someone else to do it, the chances are that you’ve got many more pressing issues to deal with than a missed payment or two, to your suppliers.

However, relationships between businesses can make or break business success in many industries.  So when your suppliers begin cancelling your credit agreements, it might make you sit up and take a look at your accounts.  At this point, how do you recognise that you’ve gone from having poor cash flow to being on the edge of insolvency?

In fact, what does insolvency really mean?

When a business is insolvent it means that it doesn’t have the funds available to cover its outgoings and debts.  If your business is insolvent, it means that you owe more than you are able to pay for.

Giveaway signs of insolvency

  1. You are not able to pay your suppliers on time

If you start missing payments to suppliers, it will only be a matter of time before they start chasing you for payment or changing your payment terms; including taking away any credit arrangements.

  1. You can’t pay yourself or your staff

If you simply don’t have the money for wages, a pay freeze for Directors might seem like it’s not a big deal if it’s promised that it will only happen that one time, but for your business’ financial position to have become bad enough for non-payment or a freeze on wages, you need to recognise it as the big red warning sign that it is.

  1. You can’t borrow any more money

Your business accounts will be maxed out and any credit or borrowing arrangements at their maximum. It’s at this point that it becomes difficult to bury your head in the sand, as without any inwards cash flow it becomes difficult to do anything except fall deeper into debt.

  1. You have received final demands for payment or have been threatened with legal action

Often a wake-up call, when your business is threatened with eviction, loss of utilities or loss of supplies, the answer is not to cut ties and build a new business relationship with someone else.  If it reaches the point where a legal claim is made against your business, it can often result in involuntary liquidation, as paying the legal costs to counter the claim can be far more expensive than it would have been to pay your business’ outstanding debts.

How do businesses become insolvent?

One of the most common reasons for business insolvency is when a business is regularly not being paid on time for the products or services that it supplies.  Cash flow relies on money coming in for money to be able to be paid out, so a few missed payments from customers or clients may not seem like a big issue at the time, but non-payment is unpredictable and when one non-payment becomes five, it can have a huge impact when you still have committed outgoings. 

If you are aware that your customers or clients are continually not paying on time, your business needs an action plan in place to retrieve the money it is owed.  If you don’t know where to start with this, ask for help – it’s important.

Another common reason for insolvency is when businesses have poor management account information.  Without accurate cash flow forecasts, bank reconciliations and debtor reports there is no effective way for you to actually know what is coming in and going out, regardless of whether it’s coming in and out on time or not.  Similarly, if your accounts aren’t being filed on time, it’s a key indicator that something is going wrong.

What can you do if you recognise these signs in your business?

If you recognise one or more of these signs in your business, hopefully it will be at a stage where system driven processes and re-education will be the answer to preventing insolvency.  Ideally, you should lead by example so that if you are relying on other members of staff to drive your accounting function and to process payments, they will understand the importance of this function whilst being bought in to focusing on the long-term future of the business.

If your business is approaching insolvency, the best thing to do is often to enter into a Creditors’ Voluntary Liquidation (CVL) which is usually the easiest way to arrange for your business’ debts to be paid in the shortest amount of time, leaving you and any other Directors able to move on to greener pastures.  The Liquidation Advice Centre demonstrates what happens in a Creditors’ Voluntary Liquidation in a useful infographic.

How can you prevent this happening to your business?

The simple answer to this is to involve the right people to support you with your business as soon as you become too busy to stay on top of every little detail yourself.  An accountant, for example, will be able to help you plan the best way for your accounts to work for you. Remember, as a business owner you do not need to know how to actually do everything, but you should know the right questions to ask – like being able to ask your accountant whether you are cash or accrual based.

In the end, to prevent your business eventually becoming insolvent, you should ensure that systems are in place so that your business can exist without your constant intervention. You guide, it runs. You shouldn’t be working 24/7 in your business, and it shouldn’t collapse around you as soon as you take a break.

I’m definitely headed for insolvency. Who can help me?

If you are facing insolvency, The Liquidation Advice Centre aims to provide expert business liquidation advice for directors facing financial difficulty.  Their offering states that they will handle insolvency issues properly and with sensitivity so that clients are able to put a stop to situations becoming worse, which in turn enables them to regain control.

 

This article was contributed by Hannah Wellings from The Liquidation Advice Centre, who provide business advice about insolvency for directors of businesses facing financial difficulty.

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Are You Stretching in Your Office?

In sports, a player’s coach (or coaches) ensures that they stretch before they take to the field. This is all part of ensuring that the sportsperson gives their best performance and can play to their maximum potential without hurting themselves.

In business, we coach business owners to stretch in a slightly different way but to achieve the same result: deliver the best performance without hurting themselves.

When we talk about stretching, we are talking about stretching yourself and your business to achieve more, and move the business forward. This does not just involve working hard in your business, but ensuring you are also working on the right things so that you are achieving the greatest outcome possible.

Let me share with you a framework that may make this whole stretching in business thing a little bit clearer.

Let’s plot a graph with 4 quadrants, where the vertical axis determines your results – going from “similar” to what you are achieving now to “greater” than what you are achieving now. The horizontal axis determines your activity, going from doing “similar” activity to what you are doing now to “different” activity to what you are doing now.

london-business-coaching-stretching-fulldiagram

Similar Results for Similar Activity – Stagnate

In the lowest quadrant, we’re talking about when you are coasting along, continuing with the same work, the same profits, and the same stuff that has been happening all along. 

While you are not moving backwards, you are also not moving forwards. You are not innovating and you are not increasing the impact of your business in any way.  

Here, you are at a stagnate stage. I would venture to say that it can be one of the most boring places to be in business. At least, it is if you have the drive to want to do more, be more, and impact more with what you are doing.

Some people may be satisfied to cruise at this point, but most of the business owners I know are not content with that. 

Greater Results with Similar Activity – Systemise

In the next quadrant up, your output has started to increase. Maybe more leads suddenly poured in and you now have lots of customers. You are probably having to work harder – maybe even work longer – in order to keep up. And your profits are growing along with this increased workload.

Sounds like a good place to be right? It might feel like your business is moving forward. But the reality is, your business is ‘growing’ but it is not ‘stretching’. If you are still doing the same kind of work you have always done, in the processes that have always existed, but you are now having to do more of it, then you are simply working more and not stretching out your business muscles.

If you are sitting in this quadrant, then what you need to focus on to move up into stretching is how to systemise. If you are constantly now doing the same things over and over – and that’s generating profit – then create processes to streamline, automate, or delegate that work now, so you can move on to opening new channels, products, and markets.

Similar Results but doing Different Activity – Satisfy

In this quadrant, you are probably working at about the same level and your profits are remaining steady, but you are constantly pivoting, trying new ideas and releasing new products and services. 

This too can feel like a good place to be. It feels like you are innovating and doing interesting things. I call this quadrant “satisfy” because many business owners feel a sense of satisfaction or even fulfilment and excitement by the constantly changing environment. Entrepreneurs enjoy discovery, so constantly doing new things can feel like fun. 

However, while it definitely is fun and exciting, you are once again not actually stretching your business – or yourself. That should actually already be clear to you, as a shrewd business person, if you are listening to the numbers. Your profits are steady – they’re not increasing. If the output or impact of your business is not increasing, then you cannot call that stretching. You are simply experimenting and testing and measuring.

If you are in this position, then what you need to do is ensure you have a proper business plan in place and that you are consistently paying attention to this plan and reviewing it (preferably quarterly) to avoid being distracted by shiny things. Make sure that if you are moving to try something new, that you are not replacing the things that are working and bringing you profit, and you are instead building in addition to those things you have already tried and tested.

Greater Results and Different Activity – Stretch

So we come to the final quadrant. Here, you can finally feel the stretch. If you are sitting in this quadrant, then I’m sure you already know that stretch feeling we are talking about!

Here, not only are you seeing your profits and results increasing, but you are also changing or expanding the way you do your business. It is that wonderful combination of both increasing your impact, and having fun while you do it. This is what we aim for in every business coaching session.

At an SME level, this might be evident in that you are finally building a marketing funnel; or choosing your niche and marketing avatar; or creating clear inbound marketing strategies; or developing a clear sales process. These are changes where you are systemising and moving forward with your business and if combined with increasing profits, then it is a clear indication that you are stretching and progressing.

In larger businesses, the stretching might be evident in opening up more marketing activation strategies; creating entirely new teams (and better management of those teams); creating parallel marketing funnels for multiple niches and avatars; refining your referral strategies and filling up the upper tiers of your loyalty ladder; or it might even be the creation of new products or services in order to service new markets.

Can you see how when you stretch properly in your business, you need be both doing more, different, and exciting things, but also keeping an eye on your output to ensure you are also progressing in impact and profit as well?

And now can you answer – are you stretching properly in your office?

Want more frameworks to help stretch?

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Our Top 10 Articles in 2016

london-coaching-group-newyear2016

2016 is nearly done, and we hope that 2017 will prove to be a year of change, growth, and abundance for everyone.

As we come to the end of the year, this is a natural time for most business owners to pause, reflect on the year that has gone by, and prepare for making 2017 the best year yet. Remember to reflect on what has gone well, as well as what could have been done better. And remember to celebrate with your team (we like to do champagne!).

We, too, have been doing our own reflection (and drinking of champagne!), as we prepare our clients for the Strategic Growth Intensive in a few weeks.

We thought we would share the 10 articles that we discovered were the most enjoyed on our blog this year.

It may be worth reading at least 1 of these articles before the year comes to a close. Take at least one small step towards making 2017 your best year yet.

Our Top 10 Articles of 2016

  1. The 3 KPIs for Managing Directors
  2. 3 Ways to Recruit Staff that Fit Like a Glove
  3. 4 Decisions Every Business Owner Needs to Make
  4. How to Upgrade Underperforming Team Members
  5. I Am The Greatest – Confidence Lessons From Muhammad Ali
  6. 3 Rules for Hiring Your Business Number 2
  7. The Best Day to Start a New Hire
  8. How to Encourage Integrity in Your Team
  9. 6 Skills the Most Effective Business Leaders Learn
  10. Why Delivering a Baby Can Help With Running a Business

Have a fantastic holiday season and we look forward to helping you in whatever capacity we can to make 2017 a year worth looking forward to.

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