Thousands of new business start-ups fail due to poor cashflow management

Thousands of new business start-ups fail due to poor cashflow management. The current environment is much tougher for start-up companies. The time spent chasing late payment is cited as the biggest obstacle facing business start-up clients and not having the resources available to recover money owed is one of the most common reasons given for […]

Thousands of new business start-ups fail due to poor cashflow management.

The current environment is much tougher for start-up companies. The time spent chasing late payment is cited as the biggest obstacle facing business start-up clients and not having the resources available to recover money owed is one of the most common reasons given for start-up failures.

A large number of debts are owed to start-ups by people or companies whose identity is unknown. It is vital to know who your customers are and to perform effective credit checks on both companies and their directors.

In addition, financial situations can change rapidly so it is important that businesses regularly review credit limits and watch out for signs that their clients could be in financial difficulty. While many businesses are not in a position to have an in-house credit management facility is crucial that credit control processes are in place so problems are quickly identified and acted upon.

Top 10 tips for credit control

1. Always perform credit checks to ensure you know your customer
2. Get your customer to complete a credit application form
3. Wherever possible obtain a personal guarantee from company directors
4. Get a signed contract incorporating your terms and conditions
5. Give your customer a credit limit and review this regularly
6. Invoice on time and ensure details are accurate
7. Phone your customers before payments are due to ensure there are no queries
8. Send monthly statements
9. Use properly drafted collection letters
10. Consider outsourcing your non paying accounts to a reputable debt collection agency like Daniels Silverman