Business Link South East is offering all businesses a free guide to setting up credit control systems and managing cash flow.
“The old saying that ‘cash is king’ is as true as ever,” says Business Link adviser, Laurence Thomas. “Money is no use to a business until it is in the bank - and it is poor cash flow that is the biggest single killer of otherwise viable businesses.
“Even companies that have never had any problem with cash flow or credit control need to have systems in place, otherwise the loss of a major customer or events over which they have no control - such as the current credit squeeze - can have serious knock-on effects.”
If cash flow forecasts show that money is likely to be tight in coming months, Thomas advises keeping your bank abreast of the situation and also considering options such as factoring and invoice discounting.
He explains: “Don’t hide from financial problems - confront them. Once you have a system in place, it is relatively easy to keep on top of your debtors. The benefits will include being able to reduce your borrowing, a more dependable supply of cash and less stress. You will also be nearer the front of the queue when your customer is paying his bills, as the businesses that chase for payment tend to get paid sooner.
“However, always think credit management rather than credit control. Inflexible application of rigid rules can turn credit control into sales prevention. Management of debtors at a senior level will ensure that the correct balance is struck.”
For your free credit control guide call 0845 6009600 or visit www.businesslink.gov.uk/southeast