Small businesses are often the casualties during an economic downturn. But there are measures you can take to protect your business during difficult times. It is important to continually monitor your business performance and implement such measures while trading is strong, before you get into difficulty.
Small and medium sized businesses are most likely to get into trouble with cash flow difficulties. Make it clear in contracts that prompt payment must be adhered to. Try and reduce the debtor days on as many accounts as possible and accustom your clients to paying promptly. Elsewhere, is it possible to free up cash by reducing any unnecessary stock you may be holding?
Business credit reports
According to a recent report, one in five SMEs have found themselves in an unsavoury financial relationship because they failed to do their homework on prospective partners. Check the financial status of business partners and suppliers before signing contracts and doing business with them by consulting a business credit report. Reports can provide information regarding a company’s finances, outstanding debts, county court judgement and the level of working capital they currently hold.
Your accountant isn’t just here to help you comply with HMRC and file tax returns. There are various accounting strategies at a business’s disposal to ensure it is achieving its full potential. While accurate bookkeeping is a given, management accounts allow you and your accountant to analyse your business data to help assess where you are, where you want to be and, hopefully help to get you there.