Even the Smallest Survivor
...Can Be King of the Business Jungle
Business survival is about more than making sales. Monitoring your cash flow is like taking the pulse of your business. If doesn't need to be racing, but it does need to be reliable.
We've spoken before about the most dangerous pitfalls and predators of the small business jungle, but one of the greatest threats you'll encounter isn't even out there prowling the swamps and long grasses. It's much closer than that, and it could be taking bites out of your business already.
The shocking fact is that poor cash flow and credit control kill off otherwise healthy businesses more efficiently than all the jungle's other terrors combined. Your cash flow is the life-blood pumping through your business' veins and the venom of late payments, sloppy bookkeeping or bad debts could already be working its way into your financial circulation.
We've already covered the basics on this, so it's time to learn a few advanced survival techniques.
When you set credit terms with a customer, for example, you're essentially extending them a loan. You can't just sit back and pretend the money has already arrived and you can't assume it'll automatically appear when it's due. You need to be very clear what your payment terms are from the outset, and follow up on them to be sure they stick.
As always, you have to look ahead to avoid the dangers in your path. If you've got a customer that can't pay a given invoice on time, you don't necessarily need to let a skipped heartbeat in their cash flow affect your own. Selective Invoice Finance, for example, could see you selling the unpaid invoice to a third party, so the customer pays them instead of you. You may only get 80%-90% of what you're owed, but you get it in time to prevent a crisis.
You don't even need to wait until there's a problem before you act. If you'd done your homework on that customer at the beginning, you might have seen their troubles coming and steered clear. A credit check now could save a lot of panic later. Don't feel awkward about this. After all, you ought to be proud of your own trading history, so don't jeopardise it by not knowing who you're dealing with.
Don't assume that your cash flow's healthy just because your invoices are being paid on time. Your business may not have a blocked artery, but if you've focused your attention in the wrong places you may be bleeding and not even know it. High sales volume, for example, is certainly something to aim for - but if you're concentrating on that rather than actual profitability then the money's going to dry up the first time an unexpected cost sinks its teeth into your bottom line.
There's a lot more to know about conquering the business jungle, so get in touch for all the advice, training and equipment you'll need out there - and keep watching this space for more Voices from the RIFT.