Tips to help you get paid on time

Cashflow management is a top priority for most business owners, and certain trades make the whole affair a lot easier for some, the lucky few who need not worry about delayed payments for their services or products are paid for immediately. But if your business operates on a deferred payments scheme (as most do), finance managing becomes slightly more complicated while you patiently wait for your customers to pay their overdue invoices. Here are a few tips to ensure you get paid on time as much as possible.

Select your credit terms carefully

When it comes to credit terms, there is, unfortunately, no one size fits all design that will work for all of your customers. If you deem it easier to offer the same credit terms duration to your entire customer base, it is primordial to ensure that these terms are clearly explained from the very start so that payers can start to organise their payment runs. If you can afford to modify the duration of terms based on the profile of each customer, then be sure to discuss them carefully with the buyer so that you can come up to an agreement that works both ways – longer terms may work for them but place your business in a tight financial situation while you wait for the payment to be due. Ensure the terms are realistic both for you and the customer and that they will be able to pay you on time based on your efforts to provide them with the required terms.

Be timely yourself

The most cited reason for a delayed payment is organisation: The invoice was not received, it was lost, it came in too late to be cleared for payment, etc. These things do happen, more often than not, but there are ways to get around the issue of bad organisation. Invoice your customers on day 1 so that you know when to expect the payment and can plan adequately. Emailing invoices will ensure that they do not get lost or delayed in the mail, and there are various tools at your disposition to ensure they have been received and read. They will also prove easier to reissue than paper copies and can prevent further delays.

Issue Reminders

Remind your customers of an upcoming due date with a friendly email, making sure it is courteous and does not give them the impression of being chased for a payment that is not yet technically due. A reminder the day before the due date will ensure that your invoice is at the forefront of their mind and could make the difference between a payment on time and an account in arrears. Same thing goes with an overdue payment, react quickly and remind the customer that their payment was not received on time – the longer you wait to let them know the later their payment (and most likely all future payments) will be as they will not feel the sense of urgency that you might be experiencing. You may soon realise that some companies simply will not pay until they are being chased for the payment, so get in there as early as possible to ensure your business is not impacted by late payers too often.

Access extra cashflow

Relying on customers’ payments to ensure things run smoothly for your business can be stressful, and if there is one thing you probably need less of it is stress. At Capital on Tap we made it our mission to help businesses like yours have access to extra cashflow when they most need it so that late customer payments do not jeopardise their entire business. With a Capital on Tap account, you can transfer funds directly into your business account to fill in the gaps while you chase your customers for late payments. Even better, with the Capital on Tap Business Card,  there is no interest on card purchases for up to 37 days when you pay your balance off in full each month. This means that you can use your card to purchase your stock or equipment and pay it off once your customers have paid you back at no extra cost!

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3 (HUGE) reasons to join a start-up

There are pros and cons to any job, be it salary, company benefits or working hours. Start-ups seem to ask their employees to make a few sacrifices (they can’t necessarily offer the same wages or benefits as their bigger, older competitors), but they make up for it in many ways. Here are three (huge) reasons to join a start-up.

They will give you a chance.

We have all uttered the words “how can I get experience if no company will give me a chance?” Most start-ups will give you that chance for the simple reason that you are  exactly where they are – trying to build yourself up from scratch. Where bigger companies might reject your application based on required experience or skills, start-ups can see beyond this. What transferable skills do you have? You worked in retail to pay for your studies, that means you probably can multitask, have excellent people skills and a lot of patience. You were a writer for the school paper? Your language skills and creativity could be great for marketing.

You will learn a lot in very little time.

One of the best things about a start-up is how easy it can be to try out new things. Within my first week at Capital on Tap I had spent time in multiple departments, and a couple of years later I had learnt learnt to pitch a sale, study risk exposure, read financial accounts, create process flows and even some coding! I am not an expert in all of these fields, but I know a lot more than I thought I ever would. All these skills add up to wider experience than doing the same job in a bigger corporation. Plus, there is no greater way to end a day than with the feeling of having learnt something new, right?

The atmosphere.

One thing that start-ups understand well is how important it is to love where you work. Forget the Monday to Friday obligatory suit and tie and say hello to being who you are. A company is only as good as the people it employs, and start-ups have learnt to let their staff celebrate their individuality. Most dress codes stop at smart casual with an emphasis on the casual for most of the time, and offices are usually packed with benefits rarely found elsewhere: sports equipment, celebratory drinks, pets, sofas, video games and anything you may wish to have at hand after a stressful morning.

There are many businesses out there, but not all of them offer the same opportunities. It’s all about finding what will keep you going back to work every day.

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5 advantages of SMEs and how to exploit them

Though we often hear about the benefits of big business, the potential advantages of small and medium sized businesses don’t get as much press. This is particularly surprising as SMEs make up the vast majority of the U.K. economy and are essential to its growth. In reality, small organisations boast an impressive array of characteristics that often give them an advantage over their larger counterparts. With this in mind, we take a look at five of the biggest advantages of SMEs and how entrepreneurs can exploit these qualities to create a successful business model.

Flexibility

The adaptability of small and medium sized businesses is one of their greatest strengths. Most smaller organisations are far more responsive than larger companies, allowing them to alter course and react to customer and market demands far more efficiently. This can be exploited by ensuring bureaucracy is kept to a minimum. Keep clear and simple channels of communication and maintain focus on what your clients want from products and services.

Team spirit

By their very nature, SMEs usually depend on far smaller teams and reduced employee numbers. This often generates a far tighter sense of community and camaraderie and helps employees develop an attachment to the business. This results in staff that are personally invested in the company’s future and will do their utmost to secure its success. Managers can make the most of this by ensuring they foster a sense of belonging and team spirit, maintaining a culture that emphasises a healthy work/life balance and rewarding the team when it performs well.

Closer relationships with customers

The more personable nature inherent in smaller teams also applies to the relationship between a business and its customers. SMEs will normally have far fewer clients on their books, interact with them more often and build stronger links than larger companies. This makes listening to your customers, working to fulfil their needs and ensuring you communicate regularly and clearly, all essential parts of running a small business.

Community based

SMEs are often far more integrated into their communities than larger companies. This is due to the fact that people are able to put a face to a brand, directly witness the impact small business can have on communities and often prefer them to the expansive, inhuman organisations of larger companies. This can be taken advantage of by engaging with your local community, hiring from within its ranks and supporting causes important to the area.

Easier to innovate

Big businesses can finds themselves hampered by size when it comes to innovating. Adapting existing business practices is a lot harder when they have to be altered on a mass scale, as factors like tradition, expense and risk all act against and inhibit change. SMEs are able to shift direction, innovate and take risks in a way that is unthinkable to larger companies. Exploit this by encouraging a culture of innovation, being receptive to new ideas –no matter who or where they come from – and by always looking to develop and expand.

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Last minute Christmas guide for SMEs

Chestnuts roasting on an open fire, Jack Frost nipping at your nose…

And that’s not all that is nipping at your nose if you’re a small business heading into the Christmas season without a strategy in place. While planning ahead for the Christmas season is always the best option, time can get away from you and suddenly November has arrived and your Christmas strategy resembles last year’s Christmas lights – one tangled mess! Fear not, we’ve put together a last minute Christmas guide for SMEs to make sure that you can take advantage of the holiday season.

While you may not have the budget to put together a commercial advert quite like John Lewis #BusterTheBoxer, there is a lot of great marketing that you can do for next to nothing. Use your Twitter, Instagram and Facebook accounts to really showcase your company and the great people that work there. Have you turned your business into one giant holly bush or planned the ultimate ugly Christmas sweater contest? Sharing these fun workplace festivities shows customers that your business is a warm and inviting place and can tempt them through the door.

Mailing campaigns, both direct and email, are another low cost avenue to take advantage of the Christmas season. Since time is of the essence, really make sure that you are reaching the right people. Are most of your customers the opposite of tech savvy? Send direct mail with promo codes, samples and product features. Specify any last minute sales, extended hours or store events that are coming up in the days leading up to Christmas. Everyone loves a bargain, and you can guarantee that you aren’t the only one who has left things until the last minute!

Aside from getting new business, Christmas is a good time to build a great customer experience and show existing customers how much you appreciate their business. Sending Christmas cards or emails to valued customers to show your appreciation can provide benefits beyond the holiday season. After all, loyalty pays back! And while you’re at it, why not include a company sticker or some other branded product to get your name out there.

The boom in business provided by the holiday season is not without stressors as more always seems to be required – more goods, more staff, more funds, MORE. Not planning ahead with your finances can leave you in a tight spot. This is where Capital on Tap’s lending facility can come in and save the day. Our 2 minute online application form means you can have those much needed funds in your account within 2 hours! Providing you with the much needed cash flow for the holiday season.

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Working from home for SMEs

Modern technology has now reached the point at which working remotely is not only feasible, but also relatively cheap and accessible. So why haven’t more small and medium sized businesses adopted such technology and moved away from the confines of the traditional office space?

Whilst many bigger businesses have fully embraced the benefits of mobile technology and remote working opportunities, SMEs still lag behind, despite there being obvious benefits to the tech.

A recent study from Steelcase has shown that only half of all workplaces in the UK are set up to make the most of remote working, with 77% of employees having access to a desktop and only 39% using a laptop. When it comes to phones, the figures are even more shocking. Just 38% of employees have a dedicated work mobile, compared to 91% who use a landline at work. Not only do these figures highlight the fact that many businesses have been incredibly slow to adopt mobile technology, but they also indicate a certain reluctance amongst many companies to let their employees begin working away from the office.

These figures may come as a surprise considering the amount of research concluding that remote working could have a drastic positive effect on the UK economy and has increased productivity amongst those employees using it. It is estimated that greater adoption of remote working technologies could generate an extra £11.5 billion year for the economy, whilst studies have shown that the most engaged workers are those that feel they have control over their work lives.

Interestingly, SMEs are considered best placed to take advantage of remote working technology. Small, flexible and often built around less rigid organisational structures, SMEs are the perfect environment for remote working and should be making the most of the opportunities at hand. With less employees, the cost of rolling out new technologies across an entire business is much lower and the move could allow some smaller companies to cut down on overheads by reducing bills, downsizing office space and making many tasks more streamlined and efficient.

So why haven’t many SMEs adopted the technology? While there is no perfect answer, in many cases it comes down to preconceived notions concerning technology and the time, effort and expertise it takes to set up. Many managers also have reservations about moving away from the traditional office space where it is easy to keep a watchful eye over staff, though this micro-management attitude may soon be a thing of the past as more businesses recognise the advantages of remote working.

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SMEs to utilise apprenticeship fund

News that small and medium sized businesses will be expected to draw from the proposed. Apprenticeship Levy has been received with some concern by SMEs across the country. Although only employers with a wage bill of over £3 million will pay into the scheme, the funds will be available to businesses of all sizes and SMEs will be encouraged to apply for assistance if they wish to employ and train apprentices. While this places such businesses at the heart of the Government’s plans to train the next generation of workers and reaffirms their position at the centre of the British economy as a powerful driver of growth and financial stability, it also raises a number of important questions.

The Apprenticeship Levy will come into force in 2017 and will involve larger business paying 0.5% of their pay bill into a national fund, from which companies can draw in order to train apprentices and develop the talents of those entering the nation’s workforce. However, the Government doesn’t expect every organisation that pays into the scheme to fully utilise their share of the fund, leaving a surplus to spend on those smaller businesses that aren’t required to pay in. An estimated £3 billion will be available in 2019/20 and it is hoped that this will benefit organisations of every conceivable size operating in the UK.

The proposals have caused some confusion and government ministers could be forced to clarify the situation. One of the biggest questions raised concerning the levy is whether SMEs will be made to rely on the left over funds generated by the Apprenticeship Levy instead of receiving other government funding. If this is to be the case, many SMEs will have doubts about the scheme. By relying solely on those funds left over by bigger organisations, smaller businesses may be put in precarious situations whereby they are dependent on big businesses not taking their share.

Further technical details relating to the way in which the Levy will operate are expected in the coming weeks and SME owners will hope that their situation will be clarified by Skills Minister Nick Boles. Apprenticeships have formed an important part of policy for the current government, as they tried to shift focus away from certain types of further education to offer a more balanced approach to education, training and career development. However, it remains to be seen what role SMEs have to play in this plan.

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High energy costs holding back SMEs

While the the UK economy is experiencing a slight resurgence and small and medium sized businesses are steadily recovering from a tough few years, there are still a number of obstacles holding them back. One such impediment can be the cost of energy.

As one of the most essential expenditures for any business, it’s a factor that business owners cannot afford to ignore. With recent developments in the energy sector, many small business owners feel that they’ve been excluded from many of the positive changes benefiting other customers.

Following a great deal of media, public and regulatory pressure, all of the big energy providers operating in the UK have cut their prices. This has resulted in lower prices for customers across the country and has been welcomed as an important and positive development in the energy sector. However, these reductions in price have not applied to small businesses, most of which are still tied into much more expensive tariffs. Excluded and ignored by the big energy companies, it’s easy to see why many small business owners may feel that high energy costs are an unavoidable barrier to further growth.

The six largest energy providers, known as the Big Six, often operate as though small businesses won’t or can’t change their energy supplier once they’ve signed up. This lowers the quality of service SMEs receive and suggests large energy companies view them as second tier customers. For example, figures from the Federation of Small Businesses (FSB) show that only a fifth of all SMEs have been offered advice concerning their energy efficiency. The lack of support for business clients only serves to accentuate the frustration felt by business owners, already angry at the perceived injustice of higher energy costs.

In the process of surveying its members, the FSB discovered that nearly a third believe high energy costs to be a substantial barrier to growth and expansion. However, the importance of energy expenditures vary from industry to industry and some small businesses will be hit harder than others. Those businesses involved in energy intensive industries, such as the manufacturing, construction or IT industries, will continue to face difficulties if prices aren’t reduced in the future. If changes are to be made, industry regulators will play a vital role and any tariff reductions will be dependant on the extent to which they are willing to apply pressure on the Big Six.

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How important is the customer experience?

The old adage that the customer is king still rings true for many businesses. Customer experience is vital to the vast majority of firms and often makes an enormous difference when it comes to creating a successful long-term business. Though companies are increasingly automated and digitalised with each passing year, ensuring customers are pleased with the purchasing process is still a top priority for businesses of all sizes. While bigger, multinational organisations may be able to disregard some complaints as an unavoidable side effect of their size, small and medium sized businesses don’t have the same luxury.

Poor customer experience costs the UK an estimated £234 billion in sales each year and is responsible for an enormous number of missed opportunities, according to a survey from Magnetic North and Censuswide. Given that a massive 92% of customers reported having a poor customer experience at some point in time, leading to one in three abandoning a purchase, the statistics indicate that there is still a great deal of work to be done when it comes to improving British businesses’ customer service and the shopping experience.

Many of the problems experienced by customers occur over new purchasing platforms, through mobile devices, the Internet and other digital technologies. The rise of online shopping has radically changed the nature of doing business and entrepreneurs now have to ensure they provide a simple, easy to use online portal through which customers are able to contact the company, make purchases and provide feedback. The increasing use of mobile devices for business has also meant that websites need to be designed with mobile use in mind – an additional consideration that usually involves extra expense.

However, these concerns and additional expenses are more than worth the additional outlay. Figures from the Office for National Statistics (ONS) indicate that 69% of people prefer making a purchase online, 62% prefer to carry out their research online and 41% would rather make complaints over the Internet. This suggests that, as well as being the dominant means of completing a purchase, the web has become the preferred way of providing feedback for British consumers.

The most important figures to emerge from the survey relate to customer allegiance and their willingness to switch to competitors. 46% of those completing the ONS survey said that they had switched to a competing business after experiencing poor customer service. 71% of those that had switched, did so because it was difficult to find customer service information. These statistics demonstrate the importance of the customer experience to businesses of all sizes and suggest that no one can afford to ignore problems with the service they provide.

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Essential tips for business budgeting

Efficient budgeting is essential to any small business and will often dictate how successful a company will be in the long term. Having a firm grip on your finances not only allows you to plan for a more secure future, but it also provides an insight into which parts of your business are problematic.

If you find yourself struggling when it becomes time to pay the rent, it should be obvious that better organisation of your key expenses is in order. If it becomes apparent that capital isn’t flowing freely through your business, better clash flow management is necessary. Budgeting is a great way to ensure that the future of a business is bright and to highlight areas where there is room for improvement. With this in mind, here are our top five tips for successful budgeting.

1. Cash flow projections

When it comes to estimating your potential sales and profit figures, it is always better to be realistic. Although a business may appear incredibly successful, it is impossible to predict the future. Small businesses are particularly at risk from cash flow crises and need to be wary. Consequently, reserved estimations ensure a healthy cash flow and keep your business from drying up.

2. Pay off debt quickly

It is incredibly difficult to start a small business without accruing some type of debt. This in itself is not a problem, though entrepreneurs should attempt to begin paying off their debt as soon as possible. The interest payable on most debt can be a black cloud hovering over newer businesses and, if left too long, can cause serious financial problems.

3. Build a reserve from profits

Though it may be tempting to reinvest all the profits from a good month back into the business, it is better to have a contingency reserve in case of emergency. Markets are volatile and the business world difficult to predict, so a small ‘bank’ of monetary reserves on which you draw from when times are tough makes good business sense.

4. Know your industry

When budgeting, it is always a good idea to have a comprehensive understanding of expected expenses in the industry. This means researching what other businesses tend to spend their revenue on and establishing whether these costs apply to your business. The most important considerations will be your essentials, such as rent, utilities, raw materials and labour.

5. Review regularly

Finally, it’s vital that small business owners regularly re-evaluate their budget and budgeting processes to ensure that it is still applicable to their context and situation.While larger organisations may do this annually, the fact that smaller business are much more volatile means that they may have to do this every month or two. Reviewing more regularly may be time consuming but it can be highly beneficial in the long term.

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Are a lack of tech skills costing your business?

It will not be news to most small and medium sized business owners that the adoption of new technologies is one of the most important drivers in growth and expansion. However, with the rapid pace of tech development, it can often be difficult to keep up, let alone make the most of new technologies. A recent study has reinforced this idea, claiming that a lack of tech skills and a reluctance to incorporate new technology into existing business models is costing 65% of SMEs time and money.

While most businesses maintain some kind of online presence – be it a website, Facebook profile or Twitter account – a large portion of SMEs have no digital skills beyond these basic applications. This is a great inhibitor of growth and will hinder businesses that could streamline operations if they incorporated new technologies or digitalised some manual processes. When surveyed, 59% of SMEs reported spending up to 10 hours a week on administration tasks, many of which could be made more simple and quicker if completed using digital software and applications. Similarly, 65% of businesses continue to use outdated Microsoft Office software, despite newer software boasting impressive improvements.

Interestingly, the reluctance to adopt new technology appears to be caused by certain attitudes prevalent both in the UK and Europe as a whole. While a lack of awareness concerning the potential benefits of social media can be blamed for many businesses not creating profiles on the variety of social networking platforms on offer, other new technologies are viewed with suspicion by businesses lacking the technical expertise required to implement them. Shockingly, the study estimated that giving SMEs two hours back each week could boost the UK economy by nearly £9 billion a year.

The survey also investigated the attitudes of those businesses that don’t utilise even the most common of digital technologies. Amongst the 36% of businesses that reported not having a website, 77% argued that they believed it wasn’t necessary due to the fact that setting one up would be expensive and time-consuming. This figure also included a large percentage of SMEs that weren’t aware of the prevalence of maintaining a digital presence. Though many SMEs understand the importance of new technology to keeping ahead of the competition, the general health of the U.K. economy does depend on greater rates of adoption in the future.

In order to keep ahead of businesses operating in lower-cost countries, SMEs need to ensure that they are integrating new technologies into their organisations and that they understand how to use them effectively.

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