In Part 1 we looked at how to account for risks involving Employees, in Part 2 the risks involving your supply chain. In this Part 3 we look at the risks associated with customers.
Without customers no business will survive – Stating the obvious I know, but your Business Continuity Plan needs to look at the wider risks – It should not just be about losing your customers but looking for changes in your customer base or the habits of your customers.
● Who are your key customers? – can the loss of one or two key accounts be made up either by one or two accounts of a similar size or would you need many smaller accounts to replace them
● Which of your customers are struggling financially – look out for extension of payment periods, a drop in frequency of orders or a switch to smaller orders.
● How are your customers interacting with your business and can you adapt to those changes. In this present circumstances a lot of companies are having to take telephone and online orders and arrange for delivery where as before they would be coming into a shop or showroom and to an extent managing their own shopping experience.
● What are your customer’s priorities – We have seen a huge trend towards ethical and environmentally friendly products and that I suspect is set to continue as we see how nature is healing itself during this lockdown period.
From the questions above you can hopefully see how it is also important that your business continuity plan links in with your marketing strategy. You need to be able to adapt quickly in changes not only to your customer base but also to your customer’s habits.
The other matter to consider and which is just as important:
- On what terms are you trading with your customers?
There are still businesses that can trade on a handshake. That handshake however, is not at all helpful if you suddenly find yourself dealing with administrators or liquidators rather than your customer. Terms and conditions are very important – they can set out protections to establish your claim to an administrator/liquidator for work in progress not yet invoiced, they can set out protections for your goods/products which have been delivered but not yet paid for. They can also assist in helping you adapt to changing circumstances with your customers – for example giving you a contractual right to “put them on stop” or enforce payment terms. If you take deposits, terms and conditions can also set out when and more importantly when they are not repayable. They can also assist in maintaining good relationships with customers as parties know where they stand.
If you have not reviewed your terms and conditions in a while it would be a good idea to ensure that they are up to date and providing you with the protection and flexibility you need. Waldrons offers a free terms and conditions health check – for more information contact Hannah Scott at h.scott@waldrons.co.uk
