Guide on How to Chase Late Payments From Clients
Your small business’ cash flow is, not surprisingly, dependent on cash coming in. Retailers can expect to have cash that keeps pace with sales – because the money goes into the till immediately – even if it does so in electronic form. But businesses with clients or customers who pay after the receipt of an invoice are a different matter. They may tend to pay when it is convenient for them, and late-paying clients can be a burden for a small business owner. Trying to get clients to pay can become a real-time drain. In fact, a 2017 study found that small business owners spend an average of 1.3 days a month chasing down money that’s owed to them by their customers It not only drains the time that you need to run your business and generate profits – it drains your cashflow too. In the worst cases, your business can become unable to pay its own bills, because customers are using the money they owe you – your money – to pay their own. Obviously, you will need to provide some form of payment terms to your clients. Providing free credit is actually what you are doing, and it has become a fact of business life, established over hundreds of years. But it is costing you money even when things go as they should – and when it doesn’t, and customers take more than the 30 days that are standard in most industry sectors, it starts costing you even more. Remember, whatever business you are in, you are not in the business of providing interest-free loans, which is what you are doing with late payments. 60- or 90-day payment terms are common, but you don’t have to work with them just because others do. Determine what deadline you want based on what your cash flow needs are. Does a 60-day deadline risk draining your own cashflow, and throwing off your own monthly payments for rent, stock, or wages? Then request a 30-day deadline - or even 14 days if that works best for you. As a small business, late payers are something that you simply cannot afford. The problems come when payments are past your 30-day payment term and you still haven’t received the cash you need. Your client is wasting your time by making you chase a payment that should be sat in your account, and costing you money. You are probably paying a lender to borrow funding that, by rights, you should already be paid. So, how do you chase unpaid invoices? Remember it is your money Chasing people to pay what they owe is difficult for most of us. It goes against British reserve or the habits of a lifetime – or it may simply be that we think if we are too pushy we will not get any more orders from the people we chase. Whatever the reason, many small business owners can struggle with late-paying clients. But remember, it is your money you are asking for, not a favour. Getting paid is the basis of business, and if you need to chase for payment, that is part of your business too - and if the late-paying clients don’t like it, all they need to do is pay what they owe. You may have to develop a slightly thicker skin – and use some of our helpful hints to ensure that getting paid on time is less of a problem. 1. Establish Clear Payment Deadlines The first hint is to make payment terms clear at the start of the relationship. Establish immovable payment deadlines in a contract that clients sign before you start work. Always pick a timeline that suits your business needs. Then make it part of your contract, and make sure your client has put his name to it. Explain that it is the way to do business, that your accountant insists on it, whatever you like – but ensure that they sign. People are less likely to take liberties with your money if they recall they are working under a contract, and it will make things very much simpler if you need to escalate things. What if the client refuses? If the client has already agreed to buy from you, it is harder for them to disagree with a reasonable payment period. If they do, it could be a red flag. When it is a new client, always do your due diligence. Check that they are legitimate, and not about to fail. If they have only come to you because they cannot get products or services elsewhere, because they have not paid other suppliers, they are planning on doing the same to you, and they are not worth doing business with. If you feel the client is legitimate but really does have longer payment needs, feel free to negotiate. You could discuss the costs – perhaps your low price includes a prompt payment discount that they would be missing out on. Just make sure whatever compromise you reach still suits you, and is set in stone with an updated contract. 2. Don't be afraid to chase In the early days of running your business, it can feel difficult - even rude - to contact a client to ask for payment. It’s not – this is business after all. You’ve done the work or supplied the goods. The client is happy, or he or she would have let you know about it and you are entitled to be paid on time. By not sticking to the payment terms you both agreed, it’s the client who is being rude. Call, be polite, but be firm. It is difficult when you start out, but as you become more experienced in business, you come to understand that chasing invoices is all part of the course and that clients who seem to be offended by being reminded of their obligations are simply trying to take advantage of you. 2. Charge Interest on late payments Government legislation has been introduced that allows you, as a small business, to charge up to 8% interest plus the Bank of England base rate on late payments. You can also pass any debt recovery costs onto the client. If you haven’t already agreed exactly when the money is due to be paid, the law assumes the payment becomes late 30 days after either: The customer receives the invoice; or The goods or services are delivered. However, you don’t have to charge the full 8% and you can set your terms as long as they’re within the government’s guidelines. Some businesses choose to charge 2% interest on payments made after 30 days, rising to 4% after 60 days. However, before you start adding to the invoice you should warn your clients that interest will be charged if your invoices are not paid on time. It is often enough to show that you know the law and are not a soft touch. Is your business suffering from late-paying clients? Find out how an Invoice Finance solution can free up your cashflow and even include bad debt protection 3. Have a measured response When you don’t receive payment on time, the temptation is to think the worst and assume the client is trying to get away without paying at all. However, a legitimate business will rarely try to do this. In most instances, the client will have simply forgotten to pay or have a prescheduled date when their payments are made – although they may be trying to improve their own cash flow at the expense of yours. Stay calm. If you get angry every time you chase a payment you may very quickly burn through clients you don’t want to lose. You need to maintain a cordial relationship with even late-paying clients. Don’t send angry messages. You need a carefully-measured response which will allow you to escalate the pressure. First, wait a couple of days - and no more - after the payment was due before sending a polite reminder. Your initial Late Invoice Letter or Reminder payment reminder should be polite and written in the right way. Simply stating that the payment is now overdue is often enough to prompt payment. Something as simple as the following is fine: Hi, … (use their first name, you need to be friendly at this point), Just to let you know that invoice 155 is now due for payment. I’d appreciate if you could settle as soon as possible. I’ve re-attached the invoice for your reference. Many thanks, …. If no payment is forthcoming and you do not receive a response from the client asking for an extension, you should then send another email. This time, explain that the invoice is now overdue and include a statement of the outstanding cost. This should be on your letterhead and look formal, but your email should still be friendly and polite in its tone. At this point, if you still have outstanding work for the client, you should put it at the bottom of your to-do list. After all, it’s hardly worthwhile to complete more work you might not get paid for. If you still haven’t received the money, its time to start calling. It’ s easy to ignore an email but it's much harder to ignore a request for payment made over the phone. Putting the client on the spot in this way should give you a clearer idea of their intentions, and help you decide what course of action to take next. If the client still doesn’t pay, then you still need to chase. If payment is promised, ask for the date it will be made by. You should also make it clear that you will cease all work for the client until the invoice has been paid. 4. Call in the law If it starts to become clear that the client is not going to pay, its time to take legal action. Telling the client that you are escalating the problem is often enough to solve it. Explain that you are considering County Court action. A County Court Judgement against a company can adversely affect the credit rating of a company for six years. Often the threat of a CCJ will get the desired response within the processed 28 day period. You could also consider a Statutory Demand. A Statutory Demand must be sent by registered post or similar to prove it has been received, and it can be a powerful incentive to pay what’s owed. It gives 18 days to resolve the issue and, if not, the debtor must pay in full within a further three days (21 days in total). Once this period is up you can wind the offending company up (compulsory liquidate) to try and get what is owed. What about a Debt Collection Agency? Despite their negative reputation, good debt collectors are responsible, organised and reputable businesses who can simply take the hard work out of a challenging situation for you. They don’t have any special powers, they have long experience and a rigorous protocol in place for getting the job done. They usually charge between 5% and 15% of the unpaid invoice as a fee for their services, and many of them will operate on a ‘No Win, No Fee’ basis. What about Invoice Finance? There is another solution to late-paying customers – Invoice Finance. Rather than having to wait for an invoice to be paid, it lets you use that invoice as the security for a loan. What this means in practice is that you can receive up to to 90% of the cash tied up in your unpaid invoices immediately after you send them. The remainder will be paid to you, minus fees, once the customer settles the outstanding balance. Invoice Financing provides an ongoing credit facility that protects you against late payment – because it ensures you get paid fast even when customers are slow. The more work you do, the more cash you will have to call on. How does Invoice Finance work? Invoice Finance provides ongoing cash advances based on the value of invoices you have issued, but have yet to be paid for. You provide a service or product to your client and agree on payment terms, and follow up with an invoice. You then notify your invoice finance lender, who will advance you up to 90% of the value of the invoice as a cash advance, usually within 24 hours of the notification. Once your client pays the invoice, you receive the remaining value of the invoice. At this stage, the lender takes their fees. There are various types of Invoice Finance arrangement and, with some, the lender will take care of chase the late payers for you. Some even offer the option of Bad Debt Protection as part of their service, which means even if your customer goes bankrupt or for other reasons fails to pay, you don’t lose out. How Rangewell helps you find the Invoice Finance you need There are many Invoice Finance providers, and the costs and charges they apply can vary. What’s more, some providers specialise in certain business sectors. To get the most appropriate Invoice Finance arrangement for your particular business, you need expert help. At Rangewell, our team of business finance experts work with you to get to know your business and understand the kind of arrangement and features you need. They can help you find lenders who work in your sector and secure the most competitive deal, complete with any extra services – such as bad debt cover – that you require.
How Technology Can Help Your Business Growth
It is very easy to see that technology has revolutionised every aspect of business. Companies use new technology to drive down production costs, automate routine tasks from inventory to accounts, enhance the customer experience, improve employee satisfaction and save money on business expenses. But what about business growth? Successful businesses don’t view technology simply as a way to automate processes but, instead, use it to open up new ways of doing business. There are many ways that technology can support business growth. Using technology to cut costs Revenue and profit are key to business success. Cutting business expenses is an effective way to reduce overheads and instantly increase profits in your business .Productivity software is designed to help improve operational efficiency, replace laborious paper-based processes and reduce costs. The most commonly used productivity software packages include those for office productivity, accounts, communications and email. Automating manual systems is an effective way to reduce costs and speed up your entire business. You can get your admin done in a fraction of the time, freeing up costly manpower to use elsewhere. Eliminating paper files and manual systems make your business faster and more agile as well as reducing costs. It means that you can take on more work without bringing in more people. Technology is the foundation of business growth But there are other ways to drive down costs. For example, you can use business energy brokers to compare energy prices from a huge number of suppliers in order to find the best rates. Energy is a substantial cost for most businesses and switching suppliers could save you hundreds on your energy bills every year. Switching supplier is now quick and convenient with the help of these sites. You can also use the internet to find new suppliers, and negotiate price reductions on all your essential supplies - freeing up revenue to fund your development Utilising digital technologies for marketing Businesses now operate in a world where having a strong digital presence is essential, not only for success but simply for survival too. The lack of a strong digital presence is a contributing factor in the failure of many SMEs, half of which are failing in their first five years of existence. With limited marketing budgets, SMEs need to make the most of digital technologies for maximum marketing impact. Digital technologies accelerate business growth because they allow companies to reach a wider audience and build lasting relationships with customers to promote brand loyalty - and bring in the new customers they need. Many companies are digitally active, but lack defined strategy and work on an ad-hoc basis. This can lead to wasted resources and opportunities being missed. The key is to develop a clearly defined digital marketing strategy, with a clear measure of performance. A good website is your starting point. Good doesn’t just mean something that looks pretty. An effective website should be user-friendly, mobile responsive and optimised for search engines. You also need to support your website with channels such as social media marketing, email marketing and pay-per-click advertising. You may need to call in expert help from a professional digital marketing team. Is your business ready to take its next steps to growth by using tech? Find out what finance options are available today Enhance the customer experience Whatever your business size or the industry you work in, customer service is vital to your growth and success. This is simply because satisfied customers are far more likely to spend money with your business, provide repeat business and recommend your company to others. Customers who are unhappy with your service are unlikely to return and leave negative reviews and feedback, creating a poor brand image which deters other potential customers. It is, therefore, vital that you do what you can to create the best possible customer experience. Fortunately, there is a huge range of new technology that can help improve the customer experience. Modern customer relationship management (CRM) software and Professional Services Automation (PSA) is becoming steadily more effective, benefiting both businesses and their customers alike. The latest CRM and PSA solutions can integrate seamlessly with business communications systems to provide valuable management insights that help boost customer service levels and promote first contact resolution. This type of electronic customer record can ensure that a customer is recognised as soon as they visit your site. This makes it easy to provide live 24/7 support with any queries. They are easy to use, provide a quick response time, and can save your business both time and money. If shopping with you online is an easy and pleasant experience, customers will be keen to do more of it. Utilising productivity software Increasing productivity and efficiency is key to reducing costs and maximising revenues, which can then be invested back into growing the business. Productivity Software is application software used for producing information such as documents, presentations, worksheets, databases, charts, graphs, digital images and more. It increases individual productivity, especially of individual office workers. Time Management Software allows you to analyse how much time is spent on each task and what one can do to re-prioritise his tasks and spend time on the most important tasks. Project Management Software lets you delegate, track major projects and have a quick overview of the progress made by each team member. The scope of business productivity software has expanded even more in recent years with the development of cloud and mobile. Cloud-based applications are often ideal for SMEs because they carry a lower up-front cost and reduce demands on in-house management. They can also be used across a range of different devices and all locations where an internet connection is available, which further helps to boost staff productivity and efficiency. Increasing productivity helps cut costs and drive output - making your business do more with less. Using mobile technologies Mobile technologies can bring a multitude of business benefits to support growth. Your team on the road can have all the information they need at their fingertips, with no need to wait to return to the office for the facts they need - or to place an order on your system. Investment in mobile technologies can help businesses to promote a happy workforce, with staff enjoying an improved work/life balance. This is thought to be very beneficial for business, as a workforce without stress leads to increased productivity and reduced costs as a result of increased staff retention. Mobile technologies can give a significant boost to efficiency and productivity too, because they allow users to complete a wide range of tasks from any location with full office functionality on-the-go. This simply means that more gets done, because staff don’t have to wait until they are at their desks to respond to colleagues and customers or read and edit important documents, for example. With employees able to work away from the office, savings can be made on physical space and the running costs associated with maintaining larger office premises. Employees can work as a team even when they’re not in the same physical space. Your business can get more done with less resources - it can feel as though your have already grown onc you adopt a mobile approach Improve employee satisfaction A productive team is at the core of any successful business. Employees who are unhappy with their working environment are likely to be less concerned with their performance and far more likely to be looking elsewhere for job opportunities with businesses that embrace the technology they know they want to work with. A high staff turnover rate will have an obvious negative effective on your business, productivity and revenue. Fortunately, business owners can now use technology to assess employee satisfaction and find ways to improve morale in the workplace. Technology can also help streamline business operations and simplify employee work tasks, thus taking the pressure off of employees. Solutions made for your business If businesses are smart about their investments in technology, adopting the right solutions for the specific needs and challenges of their business, then growth and success become easier than ever before. At Rangewell, we can help find the answers you need for the technology that will power your growth. As experts in business funding, we know the quickest ways to secure the funding you need. We can help streamline applications - ensuring that your business can receive the funding it needs in the shortest possible time - and start its growth process in earnest. Call us now – our experts are ready to help you with any finance questions you have.
How do interest rates affect businesses?
Interest rates go up and down - and right now, they are at a historic low. Most of us are familiar with the effects a change in interest rates will have on our mortgage payment. If rates fall, so can the money we are obliged to pay to the mortgage company each month, and the reverse is true when rates go up. Our mortgage repayments go up with them. But what are the effects of interest rates on business? Just what are interest rates? Credit - or borrowing - is the most common form of finance. You borrow from a lender and pay a percentage charge, known as interest, in return for the money you borrow. The interest rate is the percentage rate charged on a loan. For example, an annual interest rate of 5% means £5 is paid in interest for every £100 saved or borrowed. The higher the rate, the more the lender is charging you for borrowing you the money you need. With most types of short-term business loans, interest rates are fixed when you take out the loan. They can’t go up or down once you have agreed on the loan deal. However, some other loans - usually for larger sums and over longer periods - can vary. Usually, these variations do not just occur at the whim of the lender. They are a reaction to an increase in the Bank of England base rate. The base rate - more technically the bank lending rate - defines how much it costs banks and lenders to borrow the money they lend out to you. The base rate is important for everyone because it's the interest rate the Bank of England will charge to lend money to commercial banks. It's also used as a benchmark rate for banks when they lend money to businesses and individuals. So when the bank rate goes up, a lender may want to increase your payments to keep their margins healthy. But to be fair, they may also pass on savings if the Bank of England rate goes down. To make sure that everybody can see exactly what is going on, many loans are priced at a percentage over base rate. So, if you take out a loan at 5% over base rate, you will always pay 5% more than the base rate to the lender. The base rate is currently 0.1%, so you pay interest on your loan at 5.1%. If the bank rate went up to its historical average of around 5%, you would pay 10% on your loan, and if it went back to the 15% which it hit for a short time in a financial crisis in the 1990s, you would be paying 20%. Looking to take advantage of low interest rates right now? Find out what funding options your business has for free today What happens to businesses when interest rates change A change in interest rates will affect your business even if you don’t have loans. Customers with debts have less income to spend because they are paying more interest to lenders, such as their mortgage company, and sales fall as a result. The impact of a change in interest rates varies from business to business. The standard economic theory is that firms that make or sell luxury goods are hit hardest when interest rates rise. This is because most customers cut back on non-essentials when their disposable incomes - the cash they have left over after dealing with the essentials - fall as a result of the interest rate rise. However in the long term, with saving being more beneficial, consumers will generally make larger purchases of bigger items which they have made a long-term decision to purchase. Firms with overdrafts and flexible loans will have higher costs at the same time as their customers become more reluctant to buy When interest rates fall, consumer spending will generally increase due to poor returns on savings and they will be more likely to make impulse purchases As interest rates increase, consumer spending will generally drop in favour of saving in the short term. Exports and the value of the Pound One of the other effects of an increase in interest rates will be to increase the value of the pound. This is because an increase in interest rates demonstrates confidence in the currency which, in turn, increases demand, which then increases value. This will affect your business if you import or export goods to other countries. If you import goods, a strong pound is good news for your business as you will be able to buy them cheaper. If you export goods, a stronger pound will mean they are more expensive for your buyers in other countries so you may see a drop in demand. Property If your business owns mortgaged property, your mortgage will be on a variable rate. Variable-rate mortgages follow Bank of England base rates very closely so, if these rise, it is likely the interest rate on your mortgage will also rise very quickly. On a mortgage of £200,000, a rise of even 1% is an extra £2,000 your business needs to find each year. Obtaining business funding An increase in interest rates will generally mean that there is a reduction in bank lending because the risk of businesses not being able to afford to repay increases. When interest rates rise it will, therefore, become more difficult to obtain finance and it will also be more expensive. Interest rates are low and can probably go no lower, so it may be worth looking at your borrowing needs now, especially if you can secure a fixed rate for your loan. At Rangewell, we have experts who understand every aspect of business lending and the challenges you face when you are looking for the funding your business needs. Our team are always happy to discuss the possibilities and to work with you to find the solutions your business can benefit from. We can help you find the most competitive rates from lenders across the entire market - giving you an advantage whichever way interest rates move. Simply call us to discuss the types of lending you may need. 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How to Retain Skilled Construction Workers
Construction is a major sector of the UK economy which generates almost £90 billion each year and employs in excess of 2.93 million people. That is around 1 in 10 of all UK workers. But there is a problem. Many construction workers are now retiring, and the rate of retirement looks set to increase, with no less than 22% of the workforce over 50 and 15% in their 60s. The industry is losing out to competing sectors where work is more stable and comfortable, less demanding physically - and pay is more competitive. With an ageing workforce and a poor pipeline of young people, the construction industry is already facing a skills crisis. As many as one-fifth of all vacancies in the wider construction sector cannot be adequately or permanently filled because employers are unable to recruit staff with the right skills, qualifications or experience. The Federation of Master Builders has found that many construction companies, particularly SMEs, have been struggling to recruit skilled tradespeople, such as bricklayers, carpenters, plumbers and electricians. Demand for these basic but essential skills is far outstripping supply. As a result of this skills gap, the FMB said that wages are rising sharply for these trades. Combined with recent increases in the cost of building materials, this has dealt a sharp blow to small and medium construction companies. And the problem is set to get worse with Brexit. There is a growing concern throughout the industry that more and more skilled tradespeople from the EU who are currently working in construction across the UK will leave the country due to immigration issues or fears. Approximately 10% of the UK construction industry workforce is made up of migrants. With approximately 165,000 construction jobs currently being filled by EU nationals, the industry simply cannot afford to lose this contingent. The government has set itself the ambitious target of building 300,000 homes every year in England alone. This is looking even harder to achieve without the availability of skilled people to build them. So the question is, how can UK construction SMEs bring in skilled construction workers, and retain them? Subbies or employees? The construction industry has traditionally employed subcontractors. This can be the most flexible and cost-effective solution when there is a need to bring in skills to complete a big project. It works well when there is a large pool of skilled people keen to come in and get to work, but the use of subbies makes it inevitable that there will be no company loyalty and when the right skills are in short supply, it may be impossible to bring in the right people. The answer may be to move away from the use of casual workers and to start creating larger cadres of employees. Naturally, this will have a downside. It runs the risk of having workers idle when business is slack, and having a large workforce instead of casual labour will inevitably increase wages and administration costs. However, it will allow larger builders to call on a reserve of highly skilled people – and a high level of skills are likely to be all the more important as the technical demands of the construction industry steadily mount. Much new development requires sophisticated construction techniques and to call in new and specialised skills that conventional subcontractors may struggle to provide. A retained workforce can be trained and developed to provide the necessary skills – providing a real business advantage to their employers. But the industry is becoming increasingly technically demanding, as new technologies are introduced to meet environmental and cost objectives. You may need to invest in the training, development and retention of a permanent workforce simply because you will not be able to call in the skills you need from subcontractors. Find the most appropriate and affordable finance options for your construction business Training According to the Chartered Institute of Building, the industry will need to employ over 150,000 new workers by 2021 simply to keep up with current levels of demand. One of the ways in which the industry and the UK government together are attempting to tackle this challenging target is through the recruitment of apprentices. Close collaboration between businesses and training colleges can ensure that students learn the necessary skills to ensure further shortages can be more adequately addressed. The Government has announced a commitment to funding an additional 3,000,000 apprenticeships across all industries by 2020. Over £1 billion have been invested in training and apprenticeship programmes. However, these programmes do not guarantee jobs, and while many SME construction companies have ignored these apprenticeship programmes as too expensive, others have used apprenticeship schemes to complete a specific job, only to put their interns back in the training pool once the project was finished. It looks although the factors that are discouraging young people from coming into the industry are still doing so. Upskilling and Reskilling But if young people are still not coming into the construction industry, is it possible to use training to retain more experienced people who have already made their career in the construction industry? Investing in training is costly – but it can be a powerful incentive to retain skilled people at a time when the industry is making ever-increasing demands of skills and knowledge. Refreshing skills – upskilling and reskilling with new techniques and methods that are likely to be in increased demand is an investment in the future, both for the employers providing it and the workforce whose skills are being enhanced. Over 60% of employers in the construction sector already have some type of skills development programme in place, from transferring employees between different departments or duties to offering additional benefits to support and encourage training. These types of schemes could provide the means to upskilling the current workforce and increasing productivity, and help organisations retain their best employees. Obviously, it must be accompanied by the offer of a permanent, well-paid and secure job, or the company providing the training will simply be providing a free upskilling service for subcontractors, who would have no qualms about taking their new skills elsewhere and increasing their rates because of them. It looks as though the keys to retaining skilled construction workers could be: Offering apprenticeships which lead to secure jobs and worthwhile career progression Providing valuable training to upskill staff Offering secure and rewarding permanent roles to people who have benefited from the training Providing career progression, ensuring that there is no temptation for staff to look elsewhere Dealing with the costs The construction industry has grown and developed with the use of subcontractors. Making a switch to permanent workers will require a cultural change at all levels – and it will also have a cost implication. The cost of a permanent workforce, and the cost of training scheme way both mean investment is necessary. At Rangewell, we work closely with the construction industry, from specialists in scaffolding and utilities to providing funding for building materials and JCT contracts. With our help you can find construction finance solutions which will allow you to make the necessary investment in the future of your workforce – and the future of your business.
Customer Feedback: Why It is So Important
Your business depends on your customers – which means you need to create a great customer experience and back it up with great customer service. But how can you be sure that you are doing both of those things? If you do not try to find out what your clients actually think about your service, you could be working very hard to provide them with exactly what they don’t want. They will soon be heading to a competitor who can offer what they do need, want, expect – and be happy to pay for. Your customers' opinions about your products and services and their experience of working with you are priceless. With this information, you can adjust your products and services and the way your business works to provide them, to fit their needs more accurately. Top-performing companies consistently listen to their clients and customers – because they know how important it is. “I was producing a range of Kefir drinks. I was making sure they were organic and really healthy, and always fresh. But it wasn’t until I started talking to the small numbers of customers who bought them that I realised the problem. They liked the health-giving qualities – but they really didn’t like the taste!” “We were looking at franchising a budget vehicle respraying system from the states. It is successful over there. But when we set up a trial operation, we were getting no business. It seems UK drivers are just not as keen on their cars as we thought – and those what wanted their cars to stand out were using the low-cost alternative of wraps.” Whatever your line of business, you need to know what your customers really think – and the only way to find out is to actively seek out customer feedback. What is customer feedback? Customer feedback is simply what your customers think or feel about your products or services and the way you provide them. Their opinion is a resource for improving customer experience and adjusting your actions to their needs. These days, you can find opinions and reviews your clients post online in the form of unprompted feedback and collect them using internet monitoring tools. On a more sophisticated level, this information can also be collected with different kinds of surveys, known as prompted feedback. Both types of information can be valuable in helping you to get a full picture of what your clients think about you and your brand. Here are the top reasons why customer feedback is important for your business. Customer feedback measures customer satisfaction Customer satisfaction is crucial to your company’s financial performance. Satisfied customers tend to be repeat customers. Dissatisfied customers will be taking their business elsewhere, usually to your closest competitors. Many studies have confirmed that this theoretical link is borne out in fact. There is a close connection between customer satisfaction and business performance. It is directly linked to many benefits, such as increased market share, lower costs, or higher revenue. Therefore, there is no doubt that you want to make sure your clients are happy with your products and services. Naturally, the best way to find out if you meet their expectation is to get their opinions. Using rating-based questions will let you provide a rough number value to the qualities you want to look at, and help you estimate the level of satisfaction you have created in the past and consequently predict your company’s financial outlook in the future. So, are your customers satisfied? Did they like what they bought from you and the way that you helped them to buy it? Would they buy it again? Would they recommend it to a friend? What did they think about the price, performance and aftersales service? Customer feedback helps improve your products and services You can never afford to stand still in business. Some products date quickly, might no longer meet customer needs, could have been bettered by the opposition – customers could simply have bought all they need. If you know what customers are thinking about the product or service you offer, you can use that information to improve it. Obviously, when you introduced a new product, brand or service to market you probably had an idea about customer needs, and how whatever you were offering would provide a better answer to them. Most businesses will conduct some form of market research before a new product launch that will help explore whether there is potential demand for the product – whether customers would be willing to buy it and what they might be prepared to pay. However, only after you have launched, and your customers have used your product or service, can you really learn about all the advantages it offers, the shortcomings it has, and whether they will be buying again. Remember, customer needs and expectations evolve with time. They will want new features and benefits – getting feedback after the launch not only shows what you have got right and what you have got wrong with your offering – it can show you the direction you need to take it in for the future. However, there are limits to what you can gain from customers' previous experience. Henry Ford famously said, that if he had listened to what customers wanted, he would have built a better horse, not a Model T – but it could help you understand the needs you customers really want to be answered in future. You might have the best expertise in your industry but your professional knowledge will never be more valuable to business performance than customer insights. Customer feedback is an insight into what is working well about your product or service and what should be done to make the experience better. Their opinions help you ensure that the end product will actually meet their expectations, solve their problems and fulfil their needs. Do you feel your business would benefit from becoming more customer-centric but concerned about cashflow? Take a look at your business finance options Customer feedback shows you value their opinions People appreciate when you ask them if they are happy (or unhappy) with your service. It shows you actually value their opinion and that you are here for them, not the other way around. By asking your clients for feedback, you demonstrate that their opinion is important to you, that you are interested in their experience and feedback, not just their cash. Listening to their voice also helps you create stronger relations with them, creating valuable brand ambassadors who will spread positive word-of-mouth for you. Customer feedback helps you create a better customer experience Today’s marketing is heavily based on experience - the experiences people have with products, services and brands determine whether they will be customers again. “I had customers who told me my organic dogfood was great. But dogs will eat anything. What they were really telling me was that they liked buying the dog food for their pets. This made me realise they were buying the brand because they were committed to the organic movement. I stopped basing my marketing on the taste of the food and started talking about the way it is sourced and produced. The result - more sales.” Therefore, if you focus on providing the best customer experience at every touchpoint, clients will stay loyal to your brand. One of the most effective ways to give them a memorable experience is asking them what they like about your service and what should be improved - and then making sure that you deliver on it. Customer feedback helps keep customers and find new ones Customer feedback helps you determine if your clients are satisfied with your service and detect areas where you should improve. Asking for opinions regularly means you can keep your finger on the pulse. Each time a dissatisfied customer expresses their disappointment, you can immediately react and find a solution - heling win back their business. An unhappy customer who has a problem with your service that you make a point of fixing is likely to have greater devotion to your brand than a customer who has never been disappointed, and so never seen evidence of your devotion to making things better. Potential customers will be looking for reviews online about your products and your business. People are unlikely to provide much feedback when you simply answer a need - they are much more likely to do so if you have responded to a problem well. “I run a garage. When people bring their cars in for servicing, it is just routine - they don’t get excited about what we do. But when I found that customers were annoyed that we were not valeting their cars before giving them back, I not only started making sure cars were given back squeaky clean, I called the customers who were displeased and offered them a free valet. "They were delighted. They started telling their friends. I got better online reviews and more customers.” Working a little harder to respond to customer feedback can impress the once-dissatisfied customer to start posting online about the extra effort you have made. It could be the most powerful form of marketing there is. Customer feedback gives you a sound basis for your business decisions There is no place for business decisions based on guesswork. Successful business owners use feedback to gather data that helps them develop future strategies based on a quantifiable foundation. Only in this way they are able to adjust their products and services to perfectly fit customer needs. Take their suggestions into consideration and find out where you should allocate your money to get the highest return on investment. You might discover that, for instance, further product development is not necessary in your case, but instead you should focus on promoting your brand to ensure that more people know about your products and are ready to buy them. “You know that you need customers at the heart of your business - it is only sensible to view their feedback as the most valuable source for information in your company. They are the ones who use your products and services, so they know best what could be improved - and if you fail to meet their expectations, they will find another company which will do it better than you. It costs us money to do surveys and analyze the results - but it is an investment that is worth it.” Do you need help to fund product development, marketing or to get the customer feedback you need? At Rangewell, as experts in business funding, we know the fastest ways to secure the funding you need. We can help streamline applications - ensuring that your business can receive the funding it needs in the shortest possible time. Call us now – our experts are ready to help you with any finance questions you have.
Growth Street Borrower Action Group Launched to support Borrowers
Click here to view the full analysis of Growth Street Borrowers carried out by Rangewell Since Growth Street announced their "Resolution Event" on 15th June, many of their borrowers have been concerned and confused. To help such borrowers, Rangewell has produced this information page collating all available information and resources to help borrowers understand the situation and what the process will be. In effect, Growth Street will be asking for their loan to be repaid within the next few months and borrowers should be making alternative arrangements. The Growth Street Borrower Action Group has been set up by Rangewell to help support borrowers who are having to repay their Growth Street loans unexpectedly and are looking for alternative finance. If you require support or would like to discuss your options, please contact Paolo Lepore. Phone - 0330 808 8802 Email firstname.lastname@example.org What should I be doing as a business? Growth Street have themselves stated that "We will work with all businesses, individually, to help them to find alternative sources of finance and to develop bespoke repayment plans to try to minimise any disruption to their day-to-day operations" and that the recalling of the loan is “likely to be disruptive to your business.” We would suggest that, given the importance of maintaining external finance and the fact that Growth Street are asking for their facilities to be repaid quickly, it would be sensible to: a) Discuss the situation with your accountant - it's important to consider the cash flow consequences of what is being requested b) Seek external support from experts who understand the finance market and the current lending landscape - we would obviously suggest Rangewell (call us on 0330 808 8802 at any time). What should I do if I have not been contacted by Growth Street? We would suggest you call your contact at Growth Street as soon as possible and ask: For a named contact at Growth Street who will be dealing with you during the Resolution Period That the details of what is happening are re-posted and emailed to you as soon as possible For a clear timeline as to when your loan is expected to be repaid Again, as above, we would suggest to would be appropriate to be talking to external support. Recent Press Comment The Times 22nd June - Small firms given three months by Growth Street to repay loans P2P Finance News - Growth Street borrower action group launched Growth Business - Small businesses blindsided by Growth Street demanding its money back What letter was sent to lenders? An example of the letter that was sent to lenders is attached below: On March 16 2020, due to insufficient liquidity on the platform, Growth Street entered a Liquidity Event for a period of 90 days under clause 7.3 of our investor terms. We regret to inform you that the continued impact of the novel coronavirus (COVID-19) on the economic environment has prevented us from resuming normal P2P investor platform operations at the end of the 90 day period. Without the means to remedy the Liquidity Event, we are required by clause 7.7 of our investor terms to call a Resolution Event. When considering whether the Liquidity Event could be remedied we looked at the following factors: The stability of the landscape and wider economic climate which prompted investors’ concerns; Whether resuming platform operations would result in significant withdrawals or settings alterations; and Whether there was sufficient liquidity to cover the sum of previously requested withdrawals plus an additional contingency for further withdrawals It was concluded that normal platform operations could not resume. The benefit of all outstanding loans on our platform has been assigned to Growth Street Provision Limited. We will begin the closure of the current loan book (it being acknowledged that some borrowers may need to be given longer to repay which will extend the repayment period beyond their contractual terms). Ensuring that money is returned fairly and equitably to investors is Growth Street’s priority. Any payments we receive from borrowers will be distributed to investors on at least a quarterly basis as per clause 6.8 of the investor terms. We want to reaffirm that Growth Street remains an operational business whilst we enter the closure of our current loan book. We are in discussions with potential institutional debt financiers to provide a new source of liquidity to resume lending.
Why small businesses should diversify their revenue sources
Running a small business can present many challenges, and a single-minded approach can help you overcome many of them. Having a clear vision of what you want to achieve and how you will achieve it is valuable – but that fixed vision can mean that you lose sight of the bigger picture. If your vision is based on a single income stream, you could be putting your business at risk. You could be missing out on chances to diversify – giving your business a broader base for its success and greater stability when things don’t go to plan. A single, lucrative client or successful product can seem to be all your business needs when things are going well but, in fact, it can place you at risk. You begin to rely on that fixed income stream and start to believe that you don’t need to bother with tackling fresh opportunities. You may be aware of the grim statistic that suggests that 75% of businesses that fail at launching new initiatives and markets, and decide you can afford not to take the risk of being among them – because things are fine as they are. But this approach can leave you and your business vulnerable. Clients can go elsewhere, without warning. Great products can be bettered by a competitor. A change in market conditions can mean that your best seller is not selling any more. Are you too concentrated on one revenue stream? Having one lucrative revenue stream can easily demand increasing time and focus until it takes over everything. It might be your first cherished client or customer, or it could be the income source that has been most rewarding. However, it could become an obstacle to growth and success that takes up too much of your energy and resources, leaving you little with which to take advantage of new opportunities. Once this happens it is hard to untangle yourself afterwards – and far harder than preventing it in the first place. It’s all too easy to forget the need to stay hungry and to become complacent when the revenue is flowing in, but, in business, you simply can’t rely on it continuing to do so. If your key income stream dries up you will still have to pay outgoings while working frantically to replace it. You need multiple sources of income to safeguard your business' future. Diversifying your revenue stream is essential – and we look at how it is done “By establishing and maintaining multiple streams of funding… organizations are able to avoid excessive dependence on any single revenue source, stabilize their financial positions, and thereby reduce the risk of financial crises." Peter Frumkin and Elizabeth K. Keating In Diversification Reconsidered Keep selling No matter how well things might seem to be going now, you can’t afford to be complacent that they will stay that way. The only way to safeguard against future financial crises is to continually be on the lookout for new sales to build a solid portfolio of clients and customers. Even if you are pushed for time with your existing work, you need to dedicate an hour each day to push for new sales. Set aside some time every day to capturing and chasing leads. You’ll be surprised by how much you can achieve, even if you allow an hour a day. Of course, not every call will lead to a sale, but the more calls you make, the more meetings you get and, in turn, the more sales you generate. If it takes one hundred calls to get 10 meetings and they result in just one sale, it means uphill work. But when you do make the sale you will be all the more delighted. The real message is to start on those 100 calls now. As you get better and more confident, your pitch gets cleaner, meetings more productive and your score will increase. Of course, if your resources allow for it, create a dedicated role in the team designed solely for securing new business, so that you’re looking for new sales at all times. Keep developing The competition will be tough, so make the most of your resources by developing new products or services. Look at what you do now. Could you do it better? Are there ways to cut costs, improve quality or add features? A better product is easier to sell and harder for your competitors to beat. If you are a wedding photographer you could start offering videos of the big day – or even a drone to give a birds-eye view as the bride steps out of the limo! One of the pitfalls for start-ups is that they often don’t have the resources to develop new products, but the process is vital for your survival. It can take time and experience to identify your strengths or strategic assets and find new way to use them, but it will be time well spent. So, if you run a garage servicing diesel vans, think about branching out into MOTs or even diesel passenger cars. Or take an even more radical approach and look at electrics. Developing new products or services could help you find new customers and segments to work in – or lets you find new ways to upsell to your existing customer base. Or you could jump into an entirely new market segment, with a new customer base, to take advantage of new growth potential. Look what your competitors are doing Keeping an eye on what your competition is doing is a good way to use their good ideas in your own business – and head off trouble before it hits. What are they doing that you could replicate? This will allow you to see where you can potentially add value for current customers with new products or services, or how you could use your resources better to add value or to open up an entirely new market. If your competitors bring out a new product you may need to do the same. If they are diversifying into new areas, you might need to follow their example. Looking to diversify your business offering? Contact us today to find out how we can help Be entrepreneurial It’s easy for one revenue stream to drain your energy and distract from growth – but you might be able to use the facilities and skills that let you provide it in a new way. If you run a shop, make sure you have an online presence where people can make purchases without ever having to come in. If you run a gardening business, you have a van and trailer. Could you use them to offer a rubbish removal service – or what about delivering barbecues and garden furniture? Are there any gaps in the market that might be lucrative? Is there something your customers keep searching for that you could provide? Using your knowledge of their needs can help you find untapped avenues for expansion. A broad base of revenue The ideal position to be in is to have several sources of income for your business, all of which use the same equipment and skills. Time is money of course. You need to spend the right amount of time on each revenue source. This means allocating the appropriate time and resources for each revenue stream and managing accordingly. If one particular stream becomes unmanageable you can see that you have a problem that needs resolving. But your entire revenue stream will not be on hold until you have done so. And remember, don’t let any aspect of your diversified business get to the stage where it compromises other revenue streams or other areas of the work. Diversification of funding It is not just your work itself where diversification is vital. You need to look at your financial arrangements – and at diversifying your funding. In uncertain economic times, banks are increasingly frugal with overdraft facilities and traditional forms of funding. The financial crisis of 2008 and the stagnant conditions that followed close behind it meant that high street banks raised the barriers to entry for SMEs seeking funding. Chancellor Rishi Sunak has said that he believes the post-Covid period will see the UK heading into a recession. With money in short supply, business will be slow in every sector. You may be facing plunging revenues and a slowdown that could take a year or more to be over. The time to diversify is now. Fortunately, other sources of funding emerged as financial innovation and new digital technology offered a new range of options to business owners. Funding for your business could now include peer-to-peer lending, Invoice Financing and Asset Finance – and the list goes on. Many SMEs remain unaware of the options available, fail to shop around for finance, and continue to go directly to their bank to apply for an overdraft or loan, often on unattractive terms if they can secure one at all. When it comes to business finance, diversification can mean securing higher levels of funding than might be available form a single source – and at more attractive rates. Whilst the chaos of the last decade led to more finance options, seeking diversity in funding is equally important in stable market conditions. In fact, you should be diversifying your approach to business financing during times of prosperity – because you never know when a downturn may come. In stable times, complacency can set in and many businesses rely on a low number of traditional forms of finance because they don’t foresee a situation where a lack of options can hurt them. The first step is to break down your funding requirements into immediate, medium-term and long term needs. There is always a need for short-term cash, and the easiest solution may be is the old fashioned overdraft. It may be available from your high street bank – but if not, an independent lender may be able to provide a line of credit or overdraft replacement that works in much the same way. Short-term loans can also be made available, often in a matter of days. Over the medium-term, a business can look to Asset Financing to provide them with the tools and equipment they need. For the long term, they can avoid the effects of slow-paying customers with measures such as Invoice Financing and using specialist lending – with products such as Stock Finance or Inventory Finance to make cash flow easier to manage. Technically, Invoice Finance simply lets you use your unpaid invoices as the security for lending. But, in practical terms, it means that you get paid up to 80% of an invoice as soon as you issue it, and the remainder, less the lenders costs when your customer pays. Over the long term, larger SMEs can call on commercial mortgages to buy premises or investment property. The most important thing is to get specialist expert help to ensure that you have the type of funding you need - and the most competitive source for it. How we can help At Rangewell we are experts in business funding, and we can help you not only find the solutions you need but help you find them at the most competitive rate. We can work with you to find solutions, and we know the lenders who are able to take a sympathetic view of applications from businesses who want to diversify their income streams The lenders we work with look at the whole business case presented to them for finance, and having a business downturn in the current environment need not prevent you from getting the funding you need. We’ll work with you and help you present your case to lenders. Call us now to start diversifying your business.