The title this week is “Is this Better than Business Finance?”


Preventing “Bad Debt” is far better than seeking finance after you have been hit with bad debt. Even businesses with the very best credit ratings can have severe issues raising finance as a result of bad debt.

The copy below is part of a Postal Newsletter that I am just about to send out to our Elite Club (these are Companies that we have found finance for in the past).

In this Newsletter one of the areas I am focusing on is bad debt.


With reference to COVID and Brexit, my gut feeling tells me that in 2021, there are three things that you should keep in mind. Protecting your income for your family and your workforce, they’re all depending on you to make the right decisions.

A word of background: Prior to specialising in Business Finance, I spent over 20 years working with businesses that had severe financial issues. I would say I have spoken to and or acted for at least 2,000+ businesses.

During that time, I noted that one of the most common causes of successful businesses facing severe cashflow problems was clients not paying them, Bad Debt.


What you might wish to consider, before agreeing an extended credit limit or taking on new business.

You might be surprised to know that Corporate Insolvencies are down on last year.

The reason some suspect, is due to Government Loans.

Many businesses who would have gone out of business because they had run out of funds did not, because of state support.

This could lead to severe knock-on effects; hence your credit control policy must be rock solid.


In my experience the worst cases of poor debt collection had the following traits:

1) A kind-hearted person in accounts, readily agreeing to a delay in payment, without even referring the decision to a Director, typically agreeing 60 days instead of 30 days over the phone.

2) An on-the-spot acceptance being made for an extension, without seeing or requesting any information.

3) An acceptance it has been 70-90 days, “I am sure they will pay soon; we know them so well and they are such nice people”

4) We do not want to upset them they are a good client! (Well, that good client could make everyone unemployed!)

5) What can we do? I am sure they will pay us, its to late to do anything now. It probably is not to late, if you know what to do.


When a client asks or just takes an extended time to pay, the thought process should be:

The client currently owes me say £100k


Well with a 25% margin, I am going to have to do £400k of work AND fund the new work until I get paid, which could take 4 months all in.


Can I afford to do this and what impact will it have on my business if I do?

(The truth is the £100k loss, is similiar to you taking a £100k out of your business today, without looking at your Cashflow and then proceeding to burn the money).


You might ask yourself the following questions.

  • Why are they asking me to finance them, have they been turned down everywhere else for finance?
  • Have they even looked for finance?
  • Or have the finance terms been too onerous, and they are not willing to give guarantees, just use me as a cheap Banker?
  • Are they asking me because they think I am a soft touch? The soft touches invariably are the last to be paid, which means they don’t get paid.

A finance company would currently ask for the following before considering a loan:

  • Last 9 months Bank Statements
  • Management Accounts
  • Last full set of Accounts
  • Maybe a list of their assets

Why would you not ask for the same?


If you would prefer not to get into the finance business or become a Finance Underwriting Expert.

I do have 2 suggestions for you;

1) Refer the client to me, if I cannot get finance for them, why on earth would you give it to them? If this is the case let me help you with your best options on collecting the debt.

2) Rather than you vet the client on whether you should offer extended credit. Why not get someone who can, it can be done quickly and at a very reasonable cost, as this service is easy to do if you know how, please call me for further details.


Have you ever considered having a “Business Safety Net”? Even the finest ships in the World have Lifeboats in the event of an Emergency, why not have one for your business?

Please pick up the phone and say hi, you are always welcome to call me on my personal mobile.


Kind regards,

Mark Smillie

The numbers you need: 0800 612 5364 or 07710 466166

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