Even if the economy isn’t helpful, businesses can start planning now on how to improve their operations.
“The main goal is to manage cash flow more efficiently,” says Leigh Lones, Risk Director, Bibby Financial Services, a factoring company. “With some forward thinking and planning, businesses can implement important changes to their operations to improve their bottom lines, even if the economy remains lifeless.”
10 New Year’s Resolutions for Businesses
1. Pay your employees first, they are your highest priority and don’t forget the IRS – keep current with payroll taxes.
2. Pay attention to the credit worthiness of your customers so you are confident your will get your money. Remember a sale is not a sale until you have been paid.
3. Limit the amount of business you do with any one customer so you aren’t left penniless if they run into trouble and are unable to pay.
4. Bad business is worse than no business. Customers who fail to pay their bills on time should not be your customer any longer.
5. If a customer becomes undependable, change the terms to COD (cash on delivery). That way you can keep the customer and avoid the uncertainly of payment.
6. Keep an accurate and complete audit trail. Don’t do business on a handshake when the future of your company could be at stake.
7. Keep management accounts and use financial reporting. Plan how you will pay your expenses, rather than paying bills based on how much is in your checking account at that moment.
8. Cash flow counts. Focus on shortening terms with your customers and structure the pricing to coincide with those terms. If you wait 90 days to be paid that means you are financing your customer’s business. Or, if you give extended terms, get paid more.
9. Think about establishing a lending relationship when you don’t need financing; that’s the best time to ask for money. Then follow the financial reporting requirements. Make it easy for the financial institution to lend you money.
10. And naturally Bibby recommends, explore alternative lenders. You will probably be surprised to learn what’s out there. It can take time to find financing sources. Do your homework and get all of your questions answered ahead of time – before a crisis hits.
