About the business: The Little Bird is an independent consultancy business, owned by Jenna Wagner, focusing on assisting SME’s, sole traders and family businesses to run their businesses more efficiently and more profitably.
Jenna had previously often found herself supporting local customers and suppliers in Northern Ireland on many business-related topics, while running her manufacturing company. No matter the sector, industry or size of business Jenna was repeatedly coming across the same complaints from her peers which all stemmed from a negative cashflow position. This constant financial stress, which was usually coupled with feelings of being overwhelmed, was then leading to severe issues with personal, mental and physical health and well-being. Jenna quickly realised that she had the advice and practical tools that could assist them in turning the often-inevitable consequences of negative cashflow into positive business solutions. This is where her journey started in becoming an independent business consultant at The Little Bird.
Santander customer since? 2011
Lightbulb moment: I regularly go to business network events where I hear people talk about how great their businesses are or how well their companies are doing. Its only over tea and coffee, after these meetings have ended, that people begin to open up about the real difficulties that they are facing daily. So I decided it was time to talk about the challenges in business no one wants to talk about or admit to, the things that keep people up at night. That’s where I wanted to be, helping those owners and directors to achieve their dreams and give them a much needed helping hand when they felt alone or overwhelmed and just couldn’t find the right help or assistance. I now physically go into the business, work with those in charge and tackle the problems head on.
Late payment experience: Having worked within the construction and engineering sectors, late payment isn’t a term, it’s simply the normal way of doing business. I felt it was time to reject that construct and do something about it, no matter what industry people are working within.
Advice for people suffering late payment: Jenna’s top three tips for addressing cashflow issues…fast.
1. Payment upon order- A lot of businesses naturally move their customers onto credit terms within the first year. However, this automatically and immediately affects cash flow in a negative way. Once these terms are in place, they can be difficult to revoke, especially if the customers are also having cash flow problems themselves. Jenna’s advice is to target your best paying customers, those who reliably pay on time, who really value your product and/or service and most support your business. These tend to be the customers with whom you have the best relationships and are the most open to payment upon order. Explain to them that with their support, you can better support them as a valued customer. These tend to be the customers that have the cash flow available and are happy to pay upfront. They also tend to be your largest proportion of revenue, so this can result in a massive reversal of negative cashflow issues.
2. 50/50 or partial payments – This method is useful for good paying customers but who cannot afford to pay upfront either due to their own cash flow issues or possibly because of large-scale projects where this would just not be feasible. In this case Jenna suggests a partial payment upon order, in that they pay 50% upon order and 50% upon completion. Or if these are longer projects, plan out designated payment points throughout the lifetime of the project.
3. Get tough on aged debt – This is a matter of assessing your risk. It can be very awkward and uncomfortable to have to put a customer on stop, especially if you have a relationship with that customer. Put all customer accounts on stop where aged debt has gotten out of control. Encourage a set payment plan which could allow them to continue to order, but only while paying for new orders upfront or on a 50/50 basis, along with a partial payment towards old debts.
The key is communication. Talk to your suppliers as well as customers. Engage with your employees. Don’t pay suppliers too early or too late. It is possible to turn negative cashflow around. Think outside the box for options that suit your way of doing business and have the courage to start difficult conversations. Implement new strategies and initiatives that are right for your business, regardless of industry norms!
Did you know about the work the SBC do? I recently met the Small Business Commissioner during an event at which I was speaking, in Santander Headquarters, Belfast. I was unaware of the help that was available through the SBC before this event and would be most interested in working more closely with the SBC in future to access the options available. Any help is appreciated when it comes to this issue as it’s such a problem for so many, so I’m glad to see an initiative such as this from the Small Business Commissioner.