The brewing industry in the UK is in a critical condition. According to data gathered by the Peninsula Group, the number of brewers going out of business jumped by 300% in just the last year.
Around 45 breweries went bust during the last 12 months, compared to just 15 the year before.
Suffering from an oversaturated market, the craft brewery market has become increasingly competitive. The boom in craft brewing has led to an influx of new breweries, making it more difficult for smaller producers to stand out in an increasingly savage fight for shelf space in supermarkets and tap space in pubs.
This pressure is compounded by the ongoing cost-of-living crisis. The price of supplies and utilities has skyrocketed, pushing many small breweries to the brink of bankruptcy.
Even worse, the same cost-of-living crisis has driven down customer spending, forcing consumers to choose between luxuries and necessities, and, as a result, revenues are down while costs keep climbing.
While government support has been offered in the form of an alcohol duty freeze and financial assistance with business rates and energy bills, the impact of the pandemic, followed by the cost of living crisis and now rising interest rates, has led some experts to predict that as many as 300 breweries could close in 2023.
The brewing industry in the UK is at a critical juncture, grappling with the daunting challenges of closures, intense competition, and escalating costs, pushing breweries to their limits
Late payments in breweries
In addition to the industry-specific issues outlined above, the brewing industry is as vulnerable to the ongoing late payment crisis as any other business.
Brewers have reported that overdue invoices have hindered growth, caused expansion plans to be shelved, and brought many breweries close to the edge of bankruptcy.
Around 50% of all invoices were reported to have gone unpaid beyond their standard 30-day payment terms, with many breweries reporting months of delays in getting paid.
This ongoing issue can be attributed to the long payment cycles that are common in the brewing industry. Breweries must wait an average of 70 days to get paid, significantly longer than most other businesses.
When combined with equally long delays in receiving credit terms and getting crucial supplies, it's easy to see why the brewing industry has become increasingly vulnerable to cash flow issues.
With rising competition and reduced liquidity, breweries have had to find more efficient ways to manage their cash flow and streamline operations in order to remain competitive.
Fortunately, Chaser's expertise in both getting small businesses paid on time and supporting the
accounts receivable efforts of breweries enables them to provide actionable advice and strategies for breweries to improve their cash flow and stay in business.
So, if you're looking for ways to get your brewery out of the red and into the black, read on to learn more about how Chaser can help you take control of your cash flow.
How breweries can increase their cash-in
Increasing and maintaining cash-in can be one of the most difficult challenges facing any business. Smaller breweries, in particular, can find this task even more daunting.
Below are some of the strategies that Chaser recommends for small breweries looking to increase their cash-in:
1. Implement credit checking
Credit checking should be the first step of your accounts receivable process. By checking prospective customers thoroughly, you can ensure that you're only going to deal with reliable customers and reduce your risk of non-payment.
Rather than just credit checking customers during onboarding, make it a regular part of your accounts receivable process, and use the data to inform credit limits and terms.
The benefits of consistent credit checking include the following:
- Reduced rates of bad debt
- Reduced risk of financial losses
- More accurate customer profiles
- An improved understanding of customer positions in the market
- Improved customer relationships
Chaser can help your brewery with its credit checking. The Chaser platform provides a comprehensive suite of solutions that make credit checking easier, faster, and more effective, help ensure you get paid on time by reputable and reliable customers.
2. Have effective debtor tracking in place
Tracking the payment behavior of your customers and what they owe is fundamental to managing cash flow. It’s important to know who has already paid, who is late in paying, and how much they owe.
Good organizational and administrative skills and a comprehensive approach to invoice and payment tracking let you know exactly where to apply the resources you have to recover the most amount of money.
When combined with customer payment behaviors tracking, debt tracking tools can help you identify trends in payment behavior, determine who is likely to default, and make strategic decisions about when and how to pursue payments.
An important facet of the range of KPIs that you should track, invoice and payment tracking should be done on a regular basis to ensure that you're getting paid what you’re owed.
By using accounts receivables tools, such as Chaser, you can ensure your debtors are tracked in one place automatically, and your receivables are followed up on in a polite, persistent way - automatically.
We have been using Chaser since the beginning of the year and it has really improved our credit control process.
We have hit our debtor days target consistently since the implementation of Chaser, along with countless hours saved every week chasing customers for payment.
We have also had great feedback from customers who receive the automated follow-up email thanking them for payment. I would 100% recommend it.
- Alex Pomfret, Finance Assistant, Brixton Brewery
3. Remind customers about payments via text
Choosing the right channel to remind customers of their payment obligation is critical. While email reminders are still a key tool in debt recovery, many businesses are adding text messages to their credit control arsenal to help get them paid faster.
SMS payment reminders allow you to make sure your customers know when their payments are due and can be more effective than email in terms of reaching customers quickly.
Reminders sent by SMS have a 98% open rate and can reach your customer when they are away from their workstation. Since payment links can be included in an SMS reminder, they empower your customers to make a payment directly from their phones.
Chaser's platform offers a comprehensive SMS message reminder service that can be used to remind customers of payments due and even provide payment links for customers to make payments quickly and securely.
4. Offer payment plans
Not all customers are delaying payment for malicious reasons. Some may be suffering their own financial hardships. Offering customers a payment plan option can help you get paid while being sympathetic to their situation.
Payment plans provide customers with manageable payments that are spread over time, allowing them to pay what they owe in installments rather than all at once.
Chaser's platform makes it easy for businesses to create custom payment plans and notify customers of any changes. This way, customers can easily keep track of their payments and stay up-to-date on the latest payment schedule.
By offering more flexible payment options, breweries can help reduce unpaid invoices and late payments while ensuring that their customers are taken care of.
5. Use a payment portal or gateway
The best way to get paid is to remove as many obstacles to your customer making a payment as possible. A payment portal or gateway allows customers to pay invoices quickly and conveniently without logging into multiple platforms or looking up scattered invoicing information.
A comprehensive payment gateway offers the widest possible range of payment options, such as credit cards, bank transfers, and Apple Pay. It also provides a secure payment environment that complies with industry-standard security protocols to protect both you and your customers from fraud and data breaches.
All customers have a preferred way of paying and will appreciate the consideration shown by your brewery catering to their payment needs, building on your customer relationships while helping you get paid faster.
6. Don’t be afraid to use debt collections
Debt collection is often seen as a tool of last reports because of the perception that it will ruin the remains of the customer relationships that you've worked so hard to build.
The reality is that professional modern debt collection teams focus on mediating payment disputes and working towards an agreeable payment solution that suits both you and your customer.
The primary consideration here should always be how much your brewery is losing to non-payment and how much you’re spending on chasing this debtor up week after week.
Simply writing off unpaid invoices isn’t a solution and can be costly in the long term if it becomes a regular occurrence. Constantly throwing good money after bad by devoting more resources to chasing up the same debtors will only waste more of your breweries’ valuable time and money.
In the long run, it is usually far more cost-effective to escalate the matter and bring in professional debt collectors with the tools and expertise to ensure you get paid, especially with most collections offering no-win-no-fee pricing.
Sending a letter of intent in advance of making that call is often enough to prompt a payment and show the customer you mean business.
Improve your brewery's cash flow with Chaser
By combining the strategies above with the benefits of Chaser's cutting-edge automated accounts receivables management platform, you can make sure that your brewery has the cash flow to continue operating and increase its bottom line, even in the most challenging conditions.
Chaser helps you monitor customer payments, send automated reminders and payment links, track customer payment behavior, and create custom payment plans when necessary. This allows you to recover more money in a shorter amount of time so that your cash flow is always on track.
See how businesses like yours are getting invoices paid 54 days faster, and saving over 15 hours per week on accounts receivables management.
To find out more about how Chaser can help your brewery get paid on time, every time, book a demo with us today or sign up for your no-obligation 14-day free trial.
Limited time offer: Breweries can access a special discount: 50% off accounts receivables automation software from Chaser for the first three months. Terms and conditions apply.
