By Gary Prince, below, Chief Strategy Officer, SimplyPayMe
As the pound continues to fall, experts announce a recession by the end of 2022. Exports have dropped, consumer spending has declined due to living costs, and energy prices are through the roof. Sadly, homes and small business owners around the UK are beginning to feel the consequences, dealing with the rising energy costs and the cost of living.
So how can you recession-proof your business?
During these difficult times, SMEs need to find ways to save money and keep their businesses running. Here are four easy-enough steps to help you keep your business afloat.
Get paid on time
Preventing late invoices can be ambitious. Nevertheless, there are two crucial steps to reduce late payments:
Payment terms: Clearly stating your company’s payment terms is essential. Before undertaking a project, ensure that your clients know: 1) when payment is expected, 2) how it is expected, 3) who will be responsible for any payment-related fees, and 4) the consequences of late payment.
Payment automation: Using a direct payment platform like SimplyPayMe to automate your payments can minimise late payments, speed up the process, and help keep a good relationship with your clients.
Assess your expenses
Most businesses have several areas where they can cut unnecessary costs. It is always a good idea to re-evaluate your suppliers, consider premium renewals, or investigate tax relief. Furthermore, you can improve your essential cash flow by reducing your outgoings.
Prevent bank chargebacks
A frustrating part for a business is when customers go straight to their bank or financial institution to get their money back instead of following your refund policy. With a chargeback, you lose the money you are due and the product or service you have provided, making it difficult to redress. There are two main strategies to avoid bank chargebacks:
- Offer a solid refund policy and a clear customer service pathway. This will give your customers peace of mind whilst implementing rules (what is and isn’t acceptable under your terms of service).
- A robust anti-fraud policy. If you run an online business, teach your staff to look out for the following red flags:
- Differences in billing and shipping addresses
- The use of P.O. boxes
- PIN errors – If you are operating an online business, it pays to have an email address confirmation process and a flag for using incorrect security codes.
Know and listen to your customers
The current economic climate is affecting your customers too. What might have worked well for your clients in brighter financial times may be less effective. Get to know your customer by listening to their wants, needs and expectations. Adapting your brand’s service or products to meet your target audience’s needs will build loyalty and keep money coming in.
A good business strategy is a crucial part of your company’s success. If a small business weathers an economic downturn, it needs to plan and build resilience rather than patch up after significant losses. Implementing these simple steps and changing how you take and manage payments will keep your company alive.