The Price of Good Health

This article appears in our Q1 2023 issue of Finance Transformation Magazine. To download the issue, click here

Micro Business Owner James Blackman, Managing Director of Cocoonfxmedia, explains why the UK's late Payment Culture drives anxiety through the economy and detracts from the beating heart of small business innovation that drives the UK Economy.

Many Micro Business owners say running their Business is a passion. They love it and they wouldn't change it for the world. However, the truth is they're gliding through water like a swan but underneath the legs are weighted and paddling like crazy! This 'love' has one great 'passion killer' and that is always waiting for Payment.

I started my business career in a small company and the owner always said, regardless of your financial situation 'pay your staff and suppliers on time'. That always stuck with me, and I determined to do the same. As my career developed, I progressed to working for the large Corporates that would prove so challenging when I eventually became a Micro Business owner.

I eventually took the plunge and set up on my own 12 years ago. As I progressed to the second year as a Micro Business owner larger customers were coming on board.

However, contracting with them brought a higher level of pressure then I had anticipated, and I began to realise what it felt to be 'the little guy' in the Corporate jungle.

Consequently, with no team for back up and to share my concerns with, it started to take its toll on my health. I am sure many owners can attest to this situation and the anxiety of being the 'little guy' in negotiations with large corporate teams, whose policies and procedures can appear faceless, all powerful and unwilling to compromise.

There is a real human toll to such business induced anxiety and I don't need to tell Micro Business owners of the sleepless nights, weight gain, personality impact and the need for
some stimulant such as alcohol to
keep on going. Its far cry from the
'freedom of running your own Business' and more like a Debtors Prison!

Larger Clients promise greater rewards, but they always bring longer Payment Terms, poor Payment Processes and a complete lack of appreciation of the human impact.

Cashflow management was like a football match, HMRC, my staff and suppliers on one team and the slow paying Clients on the other. It was England RFU versus Lichfield RFU!

Few people understand the mental health and physical health problems caused by not being paid on time. There are no laws to stop this happening and large Corporates can demonstrate alack of awareness and an uncaring attitude.

Many Micro Business owners can attest to the phone calls which request a confirmation of payment date only to be told they are at the back of the queue and that's their tough luck! This is what Micro Businesses and Small businesses face every day.

I finally decided it was time to stop the rot and make a stand. I was a busy fool chasing some invoices and forgetting others, my accounting system was rubbish and I needed help. I decided to switch accounting system, set my payments terms and conditions and make it clear I expected customers to pay me on 'MY payment terms!'

My new cloud accounting system has a very cool automated invoice chaser, cashflow and business performance automation. It makes it very easy to see when the 'OSINTOT' moment is reached. Want to know what 'OSINTOT' means? Contact me!

As a Micro Business owner, I then become the President of Lichfield and Tamworth Chamber of Commerce. This gave me a platform to start asking businesses why they pay late or offer such long payment terms, and to try to drive some change.

The advice I got was to get tough and start dictating how I want to do business. Hearing this from more experienced Chamber members reinforced my resolve. Now, if you want to work with us, you work to our rules on payment.

I had a new but simple
business formula:

1. Negotiate the Contract

2. Take a Deposit upfront

3. Final Payment within 30 Days of Invoice

4. Automated Email Reminders every 7 days

5. Interest charged on Late Payments.

Does this work? Most definitely! Now our largest customers pay us in 14 days. The anxiety is over. The average time for invoices to get paid previously was 55 days. Now the average is 30 days, allowing me to invest for growth and the company is in profit.

However, Brexit and the rise in inflation has led to larger companies extending their payment terms to end of month + 90 days. I understand that port delays and increase in shipping costs are demanding but large Corporates cannot use Micro Business owners as their Bank!

The lead weight is late payment of invoices and extended payment terms. Delayed payments hold down and drains the economy. They put stress on the supply chain, If one person doesn't get paid everyone else in the chain doesn't get paid.

The mental health of micro and small business owners is being badly affected by the few poor payers and this puts a strain on the economy, society, local communities, the business owners, employees, families and the NHS.

As a CFO, what would you say if your boss told you your salary would be paid in 90 to 120 days? Could you afford your rent or mortgage. Could you feed your children? Would you still work for that company? How worried do you think you'd become?

Please, treat all Micro Business owners as fairly as you would expect to be treated.

About the author: James Blackman

James is Managing Partner of Cocoonfxmedia, a web design and marketing agency based out of Birmingham and Lichfield. They specialise in designing user-based projects ranging from website design to bespoke software design and Search Engine Optimisation.