The ups and downs of running your business
When you supply services or goods, you are in effect handing over cash to your debtors. It is not enough to work hard and expect the money to follow – you need to treat the collection of debts as a priority and manage cash flow with the care that it deserves. It is always necessary to be on top of your financial management and have an in-depth knowledge of the books.
Maintaining a healthy cash flow requires frequent attention and can feel like a continuous battle, but it is worth it. Are you low on stock because you cannot get enough cash back to replenish your stock levels, or missing deadlines for payments and worried about how to pay bills?
Invest time and effort working out ways to improve cash flow before the situation becomes critical. Revisit your credit policy, the way that you issue invoices and how you deal with late debts. Make sure that you are fully acquainted with how much you are owed and the length of time that it has been outstanding. Be clear in communicating your terms and fair but robust in your recovery procedures.
A customer who does not pay on time is not your best customer, if a ‘customer’ at all! Are your contracts fit for purpose? Are your business terms as advantageous as possible? Do they need updating to ensure that in the future your business is better protected against bad debt and risk?
Our commercial team can assist with review and drafting appropriate terms and in recovering outstanding debt. If your business needs an injection of cash, you may consider restructuring, refinancing or selling some assets. We can advise you and assist with the practicalities.
Be honest with yourself about the state of the business, your employees, customers and creditors. You may need to adjust behaviours as well as processes