Key Hints on Trading through an Economic Downturn
When economic conditions deteriorate, small businesses can be the most vulnerable. However, it is not usually lack of profitability that causes their failure – it is lack of cash. MoneySense for Business is there to offer practical advice on how to stay in control of your cash flow, such as:
Managing Your Cash Flow:
- Ensuring you have the right management information and systems in place.
- Making customers aware of your terms of business, to ensure you are paid in time.
- Carrying out credit checks before doing business, and monitoring late payments.
- Offering customers different ways to pay, from BACS payments to Standing Orders.
Dealing With Bad Debts:
- Knowing your customer. Check on Companies House that they are who they say they are.
- Checking the customer is a good risk.
- Setting clear credit limits for every customer.
- Considering credit insurance. It will cover any debts owed to you.
Spreading Your Risk:
- Identifying your more profitable customers – then bringing in new customers with a similar profile.
- Valuing the customers who earn you the most profit. It costs 4-5 times as much to get a new customer as it does to keep an existing one
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