was made in December 2022 as small business minister Kevin Hollinrake launched a review into the problem.<\/span><\/p>Whilst legislation would be a welcome help to small business, there are actions owners can take to improve their own cash flow positions. <\/span><\/p>1. Gain maximum visibility<\/span><\/h2>The best way to nip cash flow problems in the bud is by ensuring you can spot warning signs as early as possible. Checking your business’s cash position on just a monthly or even weekly basis increases the risk that problems could go undetected for too long. Using cash flow modelling software, you can see in real time what the impact of rises in costs or overdue invoices will be and take necessary, pre-emptive action. <\/span><\/p>2. Incentivise early payment<\/span><\/h2>Customers can be encouraged to settle bills on time by offering a small discount for prompt payment. Conversely, you could consider adding interest charges to overdue invoices. Incentives should also play a significant role inside the company: by training workers in the right way and developing a cash-focused culture across the business – perhaps with the targeted use of bonuses – you can ensure that staff prioritise the firm’s cash position above all else.<\/span><\/p>3. Bite the bullet on late payers<\/span><\/h2>By analysing payment data, you should be able to identify those customers who regularly pay late. You can then decide whether to continue your relationship with them: you may be better off in the long-term by reducing your dependence on these clients and seeking to develop your business elsewhere.<\/span><\/p>4. Improve payment efficiency<\/span><\/h2>The easier it is for your customers to pay you, the less cash flow pressure you’re likely to face. Using the latest payment technology can considerably cut the hassle that clients face in paying for your goods or services. 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Despite these considerations, Ashley Mallet, head of business at Paysend, says there has never been an easier time to ‘go global’: “Working with overseas suppliers can provide a wide range of benefits to UK firms – and there is no need for businesses to be nervous about entering into a cross-border partnership for the first time. Today’s communication and financial technology means that dealing with and managing foreign suppliers, whether they are manufacturers, wholesalers or contract workers, has never been easier.”<\/span><\/p>Make sure the price is right<\/span><\/h2>The first and often most important consideration of working a new supplier, regardless of where they are based, is the cost of the goods or services they are providing. If you’re dealing in a foreign currency, you need to work out not just whether the deal is attractive at today’s exchange rate, but also what room for currency fluctuations you have.<\/span><\/p>Depending on the agreement you put in place with your supplier \(see below\), you may be able to agree a rate in sterling for a certain period, which will help protect you against any falls in the value of the pound.<\/span><\/p>Get a solid supply agreement<\/span><\/h2>Consider including any contractual terms around pricing as part of a wider supply agreement, which could also cover:<\/span><\/p>What the goods or services you are buying actually are.<\/span><\/li>If there is a minimum order quantity you need to meet, or a minimum number of hours that a contractor can be expected to work every month.<\/span><\/li>How payment will be made, for example how often and in what currency.<\/span><\/li>Who is responsible for shipping costs, and how the burden of any delays is shared or apportioned.<\/span><\/li>Whether you or the supplier are allowed to work with any rivals during the period the agreement is in force.<\/span><\/li><\/ul>If goods are being sent across borders, you also need to set out who is responsible for dealing with and paying for customs procedures, for example. <\/span><\/p>Establish a relationship<\/span><\/h2>While it may not be feasible to visit every supplier in person, it is worth trying to establish some sort of personal relationship, whether it is with your key contact at the business or an individual contractor or freelancer. Initial contact has been made much simpler to manage through the mass adoption of Teams and Zoom. Once a relationship is established, follow-up meetings should be scheduled on a regular basis.<\/span><\/p>Know your legal obligations<\/span><\/h2>You will also need to understand any legal requirements that result from your relationship with a foreign supplier. For example, if you are employing foreign contractors to carry out work for you, you may need to adhere to local labour or tax laws while also complying with UK regulations. In some cases, it could be worth exploring an ‘employer of record’ service. This involves a third-party organisation acting as the legal entity employing foreign workers and taking responsibility for handling relevant regulations. <\/span><\/p>Choose the right payment solution<\/span><\/h2>Making cross-border payments on time, in accordance with your contractual terms and with the minimum of hassle is key to successful relationships with overseas suppliers.<\/span><\/p>For SMEs, the benefits of using overseas suppliers are significant, but so are the possible complexities. 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