 :: Small companies may have to cope with late paying customers, high interest rates, declining orders and an economic slowdown. But there are ways you can improve your company’s cash flow.
Almost half of small companies struggle to get customers to pay on time and over a quarter regularly ask to extend credit terms, according to research. Cashflow problems are likely to increase as the impact of the economic climate hits the European economy. Many small companies will have to tighten their belts and review the way in which they finance themselves.
Cash flow Tips:
Get on top of credit control. Make sure your terms and conditions are reviewed regularly and invoices are raised on time. The sooner you raise an invoice, the sooner you are likely to be paid. Make sure signed delivery notes are collected. That way you reduce risk of disputes, delayed payments and non-payment.
Bad debt:
The longer a balance is outstanding, the higher the risk of it becoming a bad debt. Make sure you invest time and resource to reduce your risk. It is worth bearing in mind that there are funding facilities which can release the cash.
Motivate the sales team:
Incentivise your sales teams to sell to customers that will ultimately pay. Increasing turnover is important but not at the expense of profitability.
Credit checks:
Develop a habit of credit-checking customers. Also put key customers and suppliers on constant review to flag any changes.Late accounts, changes in directorships, credit ratings, address or advisers, can all indicate instability.
Share information:
Don't be afraid to talk to your competitors about customers that you may share. Are they experiencing any problems collecting money? If so, you may wish to consider your stance on supplying that particular customer.
Take advice:
If you are unsure about your next step in the wake of the fallout from the recent credit crunch, then seek independent expert advice. ::
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