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Surviving the Credit Crunch |
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I've noticed recently on AccountingWEB.co.uk that a steady flow of advice has been pouring in in recent weeks on how businesses can batten down the hatches to survive economic hard times. Much of it repeats the same well worn clichés about managing your cash and cutting costs, without telling you how to go about it. So here are some steps you can take to help manage your cash flow in any market, especially one that is experiencing a downturn.
- Tighten credit terms for customers, perhaps reduce your payment terms from 30 days to 14 days
- Request payment, or part payment, up front
- Offer a small discount, for example 2.5%, for prompt payment
- Issue invoices early
- Send reminders in advance of payment dates
- Negotiate longer credit terms with you suppliers
- Consider renegotiating your overdraft facility with your bank
- Tightly monitor your financial position, perhaps update your accounts weekly rather than monthly
- Look for opportunities to pick up competitors business at a good price to help you grow and develop your business
- Review your workspace, if your renting workspace could you manage with a smaller area
- Ask for a rent review, there may be an opportunity to renegotiate the rent
- Cut overtime or terminate temporary contracts
- Consider retraining or redeploying your team members
- If you need to make redundancies, take professional advice first to avoid unfair dismissal and discrimination claims
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