Collumbell began offering her marketing expertise – from setting out a strategy for growing a brand to running social media accounts – to small businesses from a range of sectors. She runs Bojangle Communications as a sole trader and relies on client payments to keep her business viable and make a living. When it comes to getting paid on time, small businesses and larger corporations bring their own distinct challenges. For example, she has been told by small businesses in the past that they can’t afford to pay her that month. She jokes that her response is: “You don’t pay me, I can’t eat.” Meanwhile, when dealing with larger clients, payments to smaller companies can get waylaid.
To combat the stress late payments cause, Collumbell brought in an early payment initiative. If a client pays an invoice within 10 days, Collumbell offers them a 5% discount on their next invoice.
While the majority of clients don’t pay within the 10-day window to receive their discount, the knock-on effect on cashflow has been positive. Previously, Collumbell’s longer-term clients (those on six-month contracts) were given 28-day payment terms, and invoices were settled in an average of 36 days. The worst case she experienced was a client taking 71 days to pay. She has seen a significant improvement in payment times since the incentive was introduced – the average waiting period is now 23 days and the longest has been reduced to 39.
The discount is also a gesture of goodwill for potential clients. “When I’m talking or pitching my services to them, they will say, ‘this is a really good idea’ – it’s another tick in the box.”
As part of her new payment approach, Collumbell now asks clients to pay one month in advance, instead of a fortnight, and she offers a 5% discount if clients sign up to her services for six months.
Alongside discounts, she has also invested in some new accountancy software in order to make her payment system smoother. She uses Kashflow’s accounting package and finds the email notifications feature – when a notification is sent alerting her to the fact a client’s invoice is overdue – particularly helpful. The package also includes template letters for client-payment reminders and final demands, which helps to keep all Collumbell’s correspondence on payments uniform. Moreover, the programme keeps a log of everything sent, so Collumbell has a reliable record to hand.
She says: “The discount has meant a slight reduction in turnover, but the balance is a reduction in my stress levels as clients take less time to pay, cashflow moves faster, and I don’t need to pay a virtual assistant to do any chasing for me.”
With the worries of late payments allayed, Collumbell is now free to focus on her business. She has moved towards consulting on marketing for business awards. And she continues to invest in her training, and attend courses to broaden her skills set. “I read articles and books, plus take part in webinars, such as on Google Analytics, Wikipedia, HTML and coding. There’s always business development work to do.”
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