Confidence in collecting the cash will reduce the barriers to building the enterprise culture.
The Better Payment Practice Group (BPPG) is reminding budding entrepreneurs during Enterprise Week (15th-21st November 2004) that confidence in credit management is a vital ingredient in making their new business successful.

The Global Entrepreneurship Monitor, published by the London Business School, said that 31.7% of people cite that fear of failure would prevent them from starting a business. Minimising late payment is a critical factor in managing the risk of failure. Otherwise profitable businesses can be damaged by cashflow problems caused by late payment.

The BPPG suggests that all entrepreneurs learn and master the essential techniques in credit management to limit their exposure to slow payers and bad debts. The essential checklist is as follows:

1. Check potential customers out thoroughly before doing business with them. An inexpensive credit report will tell you quickly whether your customer is capable of paying on time;

2. Agree terms in advance, preferably in writing.

3. Issue invoices promptly and accurately;

4. Settle any disputes quickly;

5. Chase for payment effectively and establish a rapport with the person who signs the cheques;

6. Use third parties, such as solicitors and collection agencies, sooner rather than later.

Richard Wilson, Chairman of the BPPG, and representative of the Institute of Directors, commented;

“We urge all budding entrepreneurs that trade credit is a loan to be repaid. Good credit management will reduce the risk of failure dramatically and protect that all important startup cash. We hope that heeding this advice will help more businesses survive the early years so that more people will be encouraged to start up on their own.”

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