In all likelihood, your business will operate on trade credit. This can be a great resource for your company and can help you to grow. However, miss payments and you can spiral into debt very quickly. So, not only will you be in debt but suppliers will begin to cut you off, and your business will start to suffer. If you are troubled by significant amounts of debt, there are some ways that you can reduce it.
The best tip that we can give you is “don’t bury your head in the sand.” Avoiding debt, unfortunately, will not make it disappear. Tackle the problem head on to avoid being chased by debt collection agencies or being issued with a CCJ. You need to communicate with your creditors; it is in their best interest to work with you to reduce your debt. Get in contact with them to reach an agreement; it may be that you sign up to a payment plan or you are offered a one-off settlement fee. Be open to the discussion; it is better to resolve the debt in-house rather than legally.
Check your expenses
Your business expenses can add up, especially if you are not keeping track of your spending. If you work with a field sales team, then create a policy that states that the cost of sale must outweigh the expense of visiting the client, that way you are not wasting hundreds of pounds to secure a new account that only spends £50 a year. Your operating costs may be extortionate, businesses blindly agree to renewal rates for things like utilities and insurance, without searching the market for the cheapest option. It can be more work, but it is worth it if you can cut your costs. Your accountant will help to narrow down your unnecessary expenses or areas when you can cut down. Analysing your costs can help you to prepare a budget. By fully understanding your outgoings you can create more accurate forecasts.
Increase your cash flow
If you’re in debt, it doesn’t take a genius to know that you need more money coming in. Of course, this is easier said than done. If you can, offer discounts or incentives to existing customers, try to upsell your products or services to current customers, this is easier than making a new connection with a brand new client. Explore low-cost channels of reaching our to new clients; social media is a great way to make a lot of new connections quickly, email marketing is far cheaper than a direct mail campaign, and you can analyse real-time results.
Consider how many more clients you can contact if you use the phone rather than going to visit them if you have some higher profile clients then consider using video conferencing or internet calling as this can feel more like a face-to-face meeting. A great way to give an instant boost to your cash flow is by collecting any unpaid debt. Make contact with your overdue account holders and try to recover any money owed.
Avoid borrowing money
It can be tempting to apply for more lines of credit to pay off your debt, but it is bad practice to pay credit with more credit. Most of the time the credit you apply for requires you to pay back an enormous amount of interest which can put you in a worse position than when you started. Remember that if you are a limited company, you are not personally liable for any money that is owed, if you take out a personal loan or credit card to pay off your business debt then you are liable to pay that money back.
At Commercial Domestic Investigations, we understand how damaging debt can be to your business. We can take care of credit checks on your clients to give you the peace of mind that you need to continue doing business with them. We can take the pressure off your credit control department and help you to chase overdue accounts, leaving you with more time to build new relationships and search for new clients. Our team will work tirelessly to recover any money that is owed to you; if you want to discuss your requirements contact our team on 08444 159200 or email firstname.lastname@example.org.