Cash or capital, money or moolah, dosh or dough.
Whatever you call it, money makes the world – and your business – go round. And having enough of it is critical to successfully running an IT business.
Whether you’re starting out or branching out, read on to discover how to keep control over your cash and enjoy being an IT business success story.
We’ll explore the threats to your bottom line and the opportunities out there to overcome any capital challenges.
The State of the Tech Nation
The UK digital tech market is worth a staggering £184 billion. A figure that’s risen by £14 billion since 2016.
The same industry report reveals that the sector is growing three times faster than the rest of the economy. Your skills are in demand.
This growth is making starting an IT business an increasingly appealing option for entrepreneurs.
Consultancy, software development, IT support, hardware sales: whatever your niche, the opportunities for your business are there for the taking.
With thousands of SMEs and larger corporations working hard to attract clients, you need to pull out all the stops to persuade people to choose you.
But your slice of this enormous pie isn’t just under threat from hungry competitors. You could get serious indigestion from unpalatable cash challenges.
Indeed, these threats to your financial health could be fatal. Latest figures from the Office for National Statistics show that the annual number of failing UK businesses stands at 357,000.
Starting an IT business? There are many reasons why a business could fail. From poor leadership to inadequate marketing, any one of them could sound the death knell for your dreams.
And the most likely cause of sinking with little trace other than an abandoned website? The hard cash that keeps your IT business afloat hitting choppy waters.
How To Guarantee Smooth Sailing
Starting, growing and maintaining your business is a delicate balancing act. Here we’ll focus on the threats and opportunities for three key business areas: money management, customer satisfaction and adequate planning.
Cash connects them all. Get them right and you’ll have the scales working in your favour.
Threat #1: Compromised Cashflow
All businesses, whatever their size, underestimate the importance of cashflow at their peril.
A debtors’ list of any length can at best be an administrative inconvenience and at worst a recipe for disaster: a downward spiral of missing money, wasted time and damaged customer relationships.
According to the Federation of Small Business (FSB), this equates to a £2.5bn hit to the UK economy and contributes to the demise of 50,000 SMEs each year.
For those who survive, the misery of missed payments leads to cashflow difficulties for 35% of its members, delayed payments to other suppliers for 29% and reduced profit performance for 24%.
The ripple effect of unpaid invoices spreads far and wide: if your clients don’t pay you, you can’t pay your suppliers, your staff or yourself.
Unpredictable cashflow can also make forecasting uncertain, jeopardising your ability to plan for investment and growth.
Getting paid on time is absolutely critical to your ongoing success.
So if you’re offering exceptional service but are repeatedly being let down by clients who don’t pay on time, what can you do?
Opportunity #1: Beat the Cash Flow Challenge
To gain control of your cashflow, you need the optimum payment system in place.
Forget antiquated and think automated: a fully-connected digital system that drastically reduces the number of late payments.
Accepting payments by Direct Debit means you can replace educated guesswork with accuracy.
Direct Debit is used by thousands of SMEs, including IT companies like yours, to automate the payment process. Instead of relying on inflexible Standing Orders, erratic credit card payments or archaic cheques in the post, you’ll know exactly when to expect regular client fees.
By enlisting the help of a Direct Debit bureau such as Fast Pay who will oversee the scheme for you, payment will be taken from your clients’ account as soon as it’s due. Reliable, predictable and secure, it will dramatically reduce your debtors’ list while securing cashflow and reducing time-consuming admin.
You’ll have the reassurance that invoices will be paid on a certain date and, thanks to automated reports, will get a swift heads-up of any bounced or cancelled payments. A real-time, transparent status overview of each client that finishes financial frustration for good.
Gillian Thomas, company director at Pioneer Publishing is a long-standing FastPay client and once suffered from the unpredictability of accepting subscription payments via multiple methods.
Now, 90% of Pioneer Publishing’s customers are paying by Direct Debit, a dramatic change from their original way of working that has revolutionised their cashflow.
Anticipating cashflow problems will become a thing of the past as you enjoy predictable revenue and peace of mind.
Cashflow issues conquered. Continued success for your IT business.
Threat #2: Unhappy Customers
It doesn’t take much to alienate a client and look on helplessly as they head into a competitor’s arms. No matter how effective your marketing strategy is proving at attracting them, you need to work even harder to keep them on board.
One potential flashpoint is how you accept regular payments from them.
Make it easy and they’re more likely to stick around. Create obstacles and they could run out of patience.
Research by Bacs shows that, for SMEs, the average annual cost to recover overdue money stands at £9,000. And more than a third of them are having to wait two months beyond agreed terms for accounts to be settled
Repeated phone calls, emails and reminder letters are a drain on your resources and a threat to your customer relationships. Instead, time could be spent on developing your IT business and building those relationships to secure future growth.
So what methods do you offer for payment? Standing Orders? Cheques? Credit and debit cards?
Whatever you use, you’ll be familiar with the time commitment of payment admin.
Invoice issued but the cheque doesn’t arrive in the post. Or the value of a standing order needs to be updated and your customer forgets. Or you’ve missed a call from a client who wants to pay over the phone. Hassle, hassle and more hassle.
If you’re also relying on a variety of different payment methods, it’s likely that regular errors and issues are cropping up.
The result? Disgruntled clients who don’t want to deal with awkward phone calls and the admin involved in paying you correctly and on time. Your team’s morale will also suffer as they have to deal with the fall-out of unnecessarily complicated accounting.
Managing customers’ irregular, unreliable payments while juggling the consequent cashflow issues isn’t an efficient use of anyone’s time. And it could lead to a significant shrinking of your client database.
Opportunity #2: Delighted Customers
So how can wise financial management swerve this potential client catastrophe and showcase your IT business as an admin-busting, hassle-blitzing partner?
One simple option is to introduce Direct Debit as a method for collecting regular payments. Indeed, if you’re just starting an IT business, you could make it the only one.
A Direct Debit scheme will help to keep your clients close: generating the kind of priceless loyalty that will keep your bottom line blossoming.
How? By offering them a simple, reliable and flexible way to pay you.
No more faffing around changing Standing Orders, no more digging out a cheque book, no more remembering to pay you online or on the phone.
Instead, Direct Debit will give them a fully-automated system which gives them one less piece of financial admin to deal with.
Once your clients have signed a mandate, either online, by phone or on paper, they can sit back and relax knowing that their payments are being made accurately.
They’ll trust that you’ll take the right amount from their account on the agreed date. And that you’ll inform them in advance of any changes to their payment.
With the whole process streamlined and simplified, you’ll be replacing customer complaints with compliments. The chances of receiving a phone call about invoicing issues are reduced, your accounts team are free to focus on more edifying work and your reputation as a helpful, customer-centric IT business will fly.
Jennifer Spencer at Real Time Reception is enjoying the benefits: “I can’t believe how much Direct Debit has transformed my working day,” she said. “I rarely need to chase payments now.
“I know what date monies will enter our account and I can budget effectively. I can spend my time and energies more effectively too, keeping customers and staff happy.”
Julie Jerrum at UK Telecom Solutions Ltd agrees: “Over the years that I’ve used FastPay they’ve never made a mistake and all charges have been exactly as they promised.
“I send over one spreadsheet each month with the information they require and the rest happens like clockwork. FastPay’s attention to detail and professionalism has helped us concentrate on our core business and build a successful company.”
You can build on these good business vibes by offering a discount for those opting to pay by monthly Direct Debit or the opportunity to clear arrears by breaking down overdue fees into manageable instalments.
This trust and readiness to adapt will bolster your overall client relationship, adding value to your existing services.
Supercharged customer service inevitably leads to increased loyalty. When they’re satisfied with every aspect of your business, they’ll become brand ambassadors, spreading the word that you’re running an IT business professionally and efficiently.
Threat #3: Poor Planning
A third threat to flourishing financially is a failure to plan properly.
At the heart of any successful company is a solid business development plan led by confident leaders.
Whether you’re launching a new enterprise or running an IT business whose progress has plateaued, you need a supercharged plan of action to get off the starting grid or shift up to the next gear.
Central to this is a solid revenue generation process: magnificent marketing, dynamic decision-making, contented clients, polished project management, bulletproof budgeting and reliable relationships.
It’s a heady brew that will take commitment.
Opportunity #3: A Reliable Payment Partner
Partnering with great suppliers is a huge step towards establishing trustworthy relationships.
Loyal customers will spearhead company growth.
And getting a handle on your finances is a big tick in the budgeting box.
Together, they all give you the confidence to plan effectively for the future.
Teaming up with a Direct Debit bureau like FastPay will ease all these business development challenges: a reliable system for taking regular payments that secures your cashflow and keeps your clients happy.
Sign up and you’ll be up and running in just 24 hours. Hassle-free onboarding means a simple, quick solution to potential planning headaches.
FastPay will be with you for the long term. With friendly, helpful advice from experts to streamline your accounting system and facilitate future forecasting, you’ll be on firm foundations.
We’ve helped many people running an IT business to reduce financial admin from their work week and free up time to focus on core business priorities, such as growth, people development and product innovation.
As does Rachel Piper, PA to the managing director at SME IT Solutions. She said: “We wanted to automate our recurring income, choose our payment dates and generally make the procedure easier for both our customers and our business. FastPay has helped us to move towards this.
“We found FastPay easy to set up, and we had plenty of guidance from their staff. Once put in place, it was straightforward to follow when submissions needed to be processed or when new customers needed to be added.
“FastPay has proved to be the solution we hoped for and we would definitely recommend it to other businesses such as ours.”
And the relatively low costs of partnering with a Direct Debit provider will be quickly recouped by the reduction in time spent chasing customers or coordinating various payment methods.
FastPay offers a transparent, competitive pricing structure to make budgeting easy. Another helping hand for your business development plans.
If frustrating financial issues are compromising the success, or even threatening the future, of your IT business, it’s time to think smart.
While you’re offering your clients the latest tech to transform how their businesses work, it’s easy to forget that some of your own challenges can also be solved with a little digital development of your own.
So wave goodbye to old-fashioned, out-dated, out-grown methods of accepting regular payments. Chuck away cheques, cast aside cards and say sayonara to Standing Orders.