You Need Customers To Be Successful
Risk management in small business is very important. The biggest single risk for small businesses is to make sure that they don't run out of cash. Many of the concerns about cash management can be significantly reduced if the business has a strong policy towards the development of customers. If the business focuses on developing customers, in most cases, the business will enhance its cashflow prospects. Customers who pay their bills are the most important ingredient for business success. Does your business have a customer retention system including:
New Customers:
- Do you communicate with them, advise them of your terms of trade (especially if they are a credit customer)?
- Do you obtain their up-to-date details to ensure they're on your mailing database for promotional brochures, etc?
- Do your tax invoices include a "Romalpa Clause"?
Checking Of New Customers:
The best new customers are the ones that pay on time. Measures that can help you avoid taking on risky customers include:
- A standard credit check.
- Trade references.
- Bank references.
- Directors' guarantees (if the customer is a company)
Romalpa Clause:
Tax invoices for goods should include a Romalpa Clause. This is retention of title clause which is a provision in a contract for the sale of goods that the title to the goods remains vested in the seller until certain obligations (usually payment of the purchase price) are fulfilled by the buyer.
"Property in and title to the goods shall remain with the seller and does not pass to the customer until all monies payable pursuant to this contact (including any interest, freight or insurance charges) have been paid to the seller. The goods shall be at the customer's risk immediately upon delivery."