Maintaining a healthy cash flow and getting regular financial check-ups are sure-fire steps towards helping your business grow and prosper.
A common reason for the inability to save a company in financial distress is that professional advice was sought too late.
Stewart Free from Jirsch Sutherland, experts in business and asset recovery wrote this article that is full of great tips. More than a Bookkeeper fully supports the experts at Jirsch Sutherland and highly recommend them if you feel you need assistance.
Here are five simple tips to help your business thrive and reduce risk of insolvency.
Focus on cash flow
Struggling with a day-to-day cash flow deficit puts a strain on your entire business and limits growth. Since cash flow is the lifeblood of any business, implementing a solid billing and debt collecting system will inject much-needed circulation of funds.
With ‘credit clients’, ensure you have well drafted trading terms in place, specifically applicable to your business, to allow early and effective intervention when those terms are not adhered to.
Watch for warning signs
It’s easy for business owners to get bogged down in operations, often missing key warning signs of failing health. Keep an eye out for increasing debts, overdue tax and super payments, mounting stock levels, high staff turnover and problems getting finance.
Explore ways to reduce your overhead costs
Explore creative ways to reduce your overheads such as, negotiating cheaper insurance premiums, revisiting utilities expenses regularly, investigating alternative supplier relationships. The more money that can be saved, the more that can be used for growth or put towards reducing debt. This will increase your financial attractiveness, and when your creditors see you're serious about paying them back, they might be more willing to negotiate to more favourable terms for the relationship.
Negotiate with your creditors
Continually review your trading relationships. As with your customers, it is important to negotiate the trading terms with your suppliers. Trade credit is not a right, but likewise your suppliers will acknowledge and support the businesses that understand the symbiotic relationship – as you grow, they grow.
With the help of a financial specialist, you may be able to reach an arrangement with your creditors such as providing you with reduced personal risk, increase repayment periods or early payment discounts.
Your bank balance is not always an indicator of the financial strength of your business. Only seeking help once the piggy bank has been cracked open and the lounge cushions flipped, will limit the options available to make effective adjustments to preserve a business. An insolvency specialist can provide expert advice at the first signs of concern to ensure all options are understood and a considered approach is taken to redirecting the business back towards success.
If you suspect your business is in financial difficulty, it’s important to get proper accounting and legal advice as soon as you can, as this increases the likelihood of the company surviving.
A business owner can turn around a struggling business by working on ways to generate cash flow and build profits. But in times of financial distress, comes high emotion. It’s important to take emotion out of the equation and do a critical review of all areas of your business and this is where independent advice can help guide business owners to the right path.”