Businesses are wading into Q3 and it’s time for another round of Business Tips with Sean. Last quarter we looked at starting a business as well as corporate tax returns and before that we looked at outsourcing and commercial debt recovery. This quarter, Sean shares his wisdom on debt recovery, growing your business and Buy Now Pay Later. Drop us a line with any questions you have and Sean will answer them next time.
Sean, with business insolvencies set to rise, what is the best strategy for debt recovery?
Since the dissolution of the furlough scheme and the commencement of the repayment of government loans, plus the part reintroduction of winding up petitions, businesses are finding themselves in a precarious financial position. Now would be a good time to take a look at your sales ledger and identify any overdue customers that you think may be suffering financially. Having open discussions with your customers will help you determine where to prioritise debt recovery efforts and highlight which scenarios may require specialist expertise. We can take a look at all of your outstanding debts and work with you to determine the best course of action and then use all of the resources available to us at the time to recover any outstanding monies, on a no collection no fee basis.
Sean, I want to grow my team but I’m concerned about the investment. Any ideas?
The Government announced last week that the Apprenticeship Bonus Scheme and Kickstart Scheme are both being extended. Both schemes were introduced to provide financial incentives to businesses looking to expand their teams with apprentices or young people. The Kickstart Scheme sees the Government cover wages for young people aged 16-24 who are currently on Universal Credit and the Apprenticeship Bonus Scheme provided increased grants for businesses taking on apprentices. If your cash flow is suffering, potentially due to late payments and other causes, but you need help keeping up with demand, one of the schemes could be the perfect solution to help your business to grow. And in the meantime, we can help you improve your cash flow by working with you to recover commercial debts.
Sean, do you think I should implement a Buy Now Pay Later option for my customers?
The Buy Now Pay Later (BNPL) bubble has exploded exponentially over the last year or two, with big businesses such as Klarna, Clearpay and even banks such as Monzo capitalising on the huge popularity amongst young people. Some of retail’s biggest brands have implemented BNPL facilities for customers, including Boohoo and ASOS, and thousands are taking advantage of delayed payments (usually without the addition of interest). By 2026, £40bn is set to be spent using BNPL schemes and the popularity is spreading amongst SMEs. But is it a good idea to implement a BNPL structure in your own business? Unfortunately, there’s no right or wrong answer here, it will entirely depend on your business’s current financial circumstances, your portfolio of your customers and the benefits to both them and you.
Take a really close look at your financial situation, can your business survive if you were to receive a decrease in full payments and more staggered, smaller payments? Are you customers in a strong enough position themselves to keep up with the payments, or could you end up having to chase even more late payments? If you’re already on the receiving end of many late and delayed payments, it might be worthwhile focussing your time on recovering what is rightfully yours before you start embarking on a new journey with a BNPL scheme.
We hope Sean’s business tips have helped you this quarter, we’ll be back in January with some business tips to help you ride out the last quarter of the financial year and how to set yourself up for 2022-23. And if you need help with commercial debt recovery before then, reach out to our team today. Contact us.