|
Did you know that there are more businesses that go bust during a recovery than during a downturn? Businesses should focus on four key areas to survive a recovery.
1. Directors should be realistic and stress-test their companies’ business model. They should focus more on cash flow and less on profit and loss. It is the lack of cash that causes businesses to fail. A Company will become insolvent if it cannot pay its bills on time.
2. Taking advice from a knowledgeable and professional financially aware person, preferably a finance director. Contact us and we will assess if your business has adequate management systems in place and reporting necessary to provide early warning of possible problems and issues that must be corrected and acted upon. We will help you take action and make the necessary changes to surivive.
3. Credit and risk management. Make sure that you are fully aware of the risks and how best to manage them. This can include a review of the cost structure and an assessment of a customer ‘s ability to pay. Consider Companies House searches, checking with a credit reference agency, and obtaining credit insurance. Make sure that suitable credit limits are given and that customers are not given more credit than they can reasonable afford, and that they pay their debts on time.
4. Diversify the customer base in order to reduce risk. Try to avoid relying on a small group of customers, since if one of them were to fail, it could result in your failure too. |
Surviving the Recovery
