Jane Hewitt is marketing manager for Ormsby Street, the SaaS company behind CreditHQ. She is an experienced online and offline marketeer in the start-up space with over 15 years’ experience. In this guest post she discusses why trust is key for small businesses selecting suppliers.
Whilst July 4th might only be an important date in the U.S. diary, there’s been a push in the past few years, for the ‘punnily’ named ‘Independents Day’ (namely by My Business First) to celebrate the UK’s growing independent businesses sector.
At the end of 2014, small firms in the UK accounted for 99.3 percent of the 5.2m private sector businesses, with 3.3m of these being sole proprietorships. They employ more than 15.2m people with a combined turnover of over £1.6trn, so it’s safe to say that the UK’s small businesses are booming!*
There’s been an explosion of independent businesses in recent years, especially pop-ups (and not just in the hipster world of east London). More and more consumers are placing value on being part of a community which works together, provides local jobs and forms the backbone of the UK’s economy.
One of the most important concerns for small businesses, and their ability to succeed, is customer satisfaction, trust and reputation. Unlike huge corporations, independent businesses rely on a core, loyal group of customers returning in order to grow – and this doesn’t just mean consumers, but a businesses’ trading partners, suppliers and service providers.
Cash-flow is still one of the major headaches for small businesses — at the end of the day if you’re not getting paid nor paying your suppliers within a reasonable time period, the chain of small business trust is broken. This can lead to businesses paying the ultimate price, with government statistics revealing that as many as one in three businesses fail within the first three years.
Late payment of invoices is a major issue for small businesses, choking cash-flow and slowing growth. 30percent of SMEs spend more than £500 per month servicing debt late payment costs.
So if you’re one of the millions of small business in the UK today, how can you ensure you know who’s going to pay their invoices on time, or indeed at all? Last year’s statistics showed that the average small business waits 71 days to be paid, and is owed on average £6,142 in late payments.
The best way is to protect yourself against late payment is to know who your customers and suppliers are before you start trading with them; and these simple checks for credit scores and payment indicators can be accessed, at least in a basic form, for free.
By using an online tool such as CreditHQ, you can keep a close eye on your trading partners, competitors and can even see how your own business is perceived by others. If a company changes how quickly it pays off its debts, for example, it could mean that they don’t have enough funds available to settle their payments and have problems with their own cash flow. If that’s the case, you’ll want to make sure you’re paid as soon as possible, so it may be worth considering adjusting your trading terms, giving stricter deadlines or making sure that you have additional cash flow facilities or even invoice insurance to ensure that you are protected financially.
More than £6,000 is a sizeable amount for an average late invoice, and could well be the difference between being able to pay staff on time and hitting trouble, thriving or going out of business. But as we work with around 25,000 small businesses in the UK, we know that trying to understand complex sets of data about every customer is the last thing a busy small business has time for. That’s why the Insight Engine on CreditHQ looks at this information and decides what’s important, suggesting how businesses can respond when dealing with different types of customer or different circumstances.
This means small businesses can review information quickly and understand what’s going on and what their options are so that they can run their businesses efficiently and focus on growth.
At CreditHQ we’re all for celebrating independence and freedom, be it in America or closer to home; so we’re embracing both types of ‘Indie Day’ and offering one month’s free access giving you all the information you need to keep track of your customers, suppliers and indeed your own business’ financial health! Just sign up and enter the code ‘Independents’ when creating a Standard account.
CreditHQ is built by Ormsby Street, a Software-as-a-Service business based in Old Street, London. Formed in 2014 to take over the operation of the financial data proposition of BCSG, Ormsby Street is developing the next generation of financial data services for small businesses. Its team of high-performing product innovators and software engineers are quietly taking sophisticated financial information and turning it into a next-generation digital tool to help businesses make good decisions about customers, suppliers and themselves.