By Daniel Hunter

James Caan, the serial entrepreneur, is urging smaller businesses to take more responsibility for their own actions in getting paid, and to consider alternative funding mechanisms in order to keep the cash flowing.

Writing the first in a new series of guest blogs for the Institute of Credit Management (ICM), Caan suggests that small businesses need to act to remove the barriers to payment: “The basics are, of course, to invoice on time, promptly and accurately,” he says. “They are also to ensure that your quote has been accepted, the product or service delivered, and the terms and conditions of payment agreed in advance.

“If you do nothing else but stick to these simple rules, then your business will not only survive, but it will actually have every prospect of growing and contributing to the economic recovery that we so dearly seek.”

And he says that there is more small business can do: “The Government is keen on encouraging the banks to lend but alternative funding mechanisms such as factoring and invoice discounting rarely deserve the negative publicity they are inclined to attract, and Supply Chain Finance — a particular favourite of Government in 2012 — also has its place for certain companies at certain times.”

Knowing your customer, Caan acknowledges, is a particular mantra of the ICM, and again the tools at a company’s disposal — from credit reference agencies to credit insurance — all have a role to play: “They not only protect you from the damaging impact of not getting paid, but more positively in taking on new customers and even new markets, safe in the knowledge that you are better informed,” he adds.

Caan says that professional credit managers, and Members of the ICM specifically, have a critical role to play, and that they are already actively supporting the UK recovery: “As professionals, it is incumbent upon the ICM and its Members throughout 2013 and beyond to ensure that the support is there for these companies when they need it most.”

Philip King, Chief Executive of the ICM, agrees, and highlights the recent surge in demand for the ICM’s Managing Cashflow Guides, produced for the Department for Business, Innovation and Skills (BIS), that have now exceeded 400,000 downloads. The most popular of the 12 Guides is the one entitled ‘Payment Terms’:

“Demand for the ‘Payment Terms’ Guide has almost doubled in the last year (from c23,000 to c43,000) and in total represents almost a quarter of all of the Guides downloaded*,” he says. “This provides graphic proof that many businesses are already focused on keeping the cash flowing and seeking professional advice wherever it is available.”

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