In our previous posts, we have discussed the potential benefits of company formation in a recession and – subsequently – how to ‘recession-proof’ your business. In this post we will consider the main reason small businesses fail in an economic downturn – lack of cash flow. However innovative the idea, and well structured the business, successful cash flow management is the key to surviving a recession. Take a look at the below suggestions:
Review your cash flow
Monitor your bank account daily, plan for potential lags in payment and maintain a precise cash flow forecast.
Ensure the efficient collection of payment
Have a clear collection procedure. Send out payment reminders prior to the collection date and as soon as a payment is late begin chasing.
Credit check your clients
In the current economic climate it is vital that you are aware who you are doing business with .This is an easy and inexpensive process – review company reports HERE
Cut internal costs
Streamline internal costs and introduce internal efficiencies. From changing your business bank account and renegotiating utilities to switching to a virtual office, there are many ways you can save money.
Confront potential problems early
Accept that times are difficult and admit and confront financial problems early on.