The Cheque’s In The Post

While we have looked at the potential benefits of the recession for small businesses, it would be short sighted not to recognise the obvious risks it poses to small businesses both from the beginning company formation process to the start up phase. There are a number of ways to help you survive the recession but this must start with effective cashflow management.

Good credit control is one of the key functions of a successful business.  This applies in all market conditions, but is particularly true at a time of recession.

Obtaining credit reports and monitoring customers and potential customers is essential, but all of us have been given the run around by companies with a multitude of excuses as to why payment hasn’t been made.  One of the most common of these is of course “the cheque’s in the post”.  Making it easy for your customers to pay you is one way of improving credit control and ultimately cash flow.  Encouraging your customers to pay by BACS directly into your bank account reduces administration for them and you and ensures that cheques don’t go “missing”.

Make sure your invoices have your full bank details on, communicate these details in all correspondence with customers and even consider offering an incentive for paying by direct bank transfer.

Some companies, who have direct debit facilities, insist on direct debit or standing orders as a prerequisite to doing business.  This is obviously easier where the company providing the service has some leverage and isn’t always easy for the smaller company.

Whatever methods are used, keeping a check on the companies you work with is critical in these difficult times.