ARK Accountants - Credit Crunch Survival Tips

With the credit crunch setting in and the prospect of a potential recession the overall economic climate does seem to be bleak this will effect cashflow for any business. However there are simple steps every business can take that will ease some of the negative impacts of the credit crunch without having resort to reducing the levels of staff or cut back on marketing or any other key areas first.

Credit Control - Ensuring that there is a good credit control process is one of the quickest and easiest ways to help cashflow. Make sure you carry out a credit check before taking on new customers to ensure that they are credit worthy. When setting credit terms make sure they are realistic, review credit terms with your existing customers, and above all chase outstanding debt. The last point will cause many companies a lot of difficulties if left, but remember the longer a payment is left outstanding the harder it is to recover, sometimes all it takes is a reminder letter or a phone call.

Invoicing - Be organised and make sure invoices are issued on time the longer an invoice waits on your system the longer it will take to receive the money which will be bad for cashflow. Double check invoices so that they are sent to the right person at the right place the last thing you want is your invoice to be stuck floating around in another company's administrative process. Give incentives by offering early settlement discounts to your customers to encourage them to pay early or on time through direct debit or standing order.

Supplier Credit Terms - It may be a good idea to review the credit terms you are on with suppliers and negotiate better ones. Doing this will give you a longer time before payment easing any cashflow burdens.

Debt Factoring - If cashflow is a real problem find a factoring company to take over the debt you are owed. Often factoring companies will provide you with working capital up front giving you the positive cashflow needed.

There are some cost cutting may be another way of making sure you receive the best value for money and at the same time relieving the cashflow strain.

Stock - Reducing the levels of stock that you hold will mean that less is being paid out at anyone time and so help cashflow, starting with your slow selling products first. You might also be able to work with your suppliers to implement a just-in-time stock management process.

Insurance - Some insurance is necessary for all businesses but make sure you are getting the best deal from insurance companies, shop around, use price comparison websites, a little bit of time spent here could save you more than you think.

leasing - Rather than buying assets it may be more worthwhile leasing assets such as cars and machinery. Suppliers especially now are offering some good deals to get your custom, so if you do already lease then make sure you get the best deal.

Feel free to visit www.arkaccountants.com for more information or email at info@arkaccountants.com