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How to Fix your Finances for SME Owners | International Collection Services

Take a look at how you can turn around your business in a 10 step process.

Most businesses will experience temporary cash flow problems at some point or another, very often these arise due to matters outside of the business owner’s control.  However, taking immediate action can mean that your business will survive the financial squeeze and bounce back to benefit you in the future.  Here are the 10 steps you can take to overcome cash flow problems for your business:

1. Admit that you have a problem.  Recognising that you have a financial problem makes it easier to face up to it and deal with it.  Don’t just hope that things will improve, you need to take a detailed look at what has caused the problem so that you know what to do to resolve it.

2. Understand what has caused the financial problem – the most common cause of cash flow problems for businesses is clients or customers not paying on time.  Contact your customers immediately to find out why they haven’t paid.  Be diplomatic but firm and ask what the problem is and set a payment date.  Don’t forget that those who shout the loudest usually get paid first so you need to focus your customer’s attention on paying you ahead of other suppliers.

3. Take a fresh look at your cash flow forecasts and re-run your projections factoring in the current problem.  This will give you an idea of how the problem will impact your business and ascertain whether additional finance is needed in the short term.

4. Look for funding solutions – any external funding will cost your business money so why not consider if you can raise temporary funding from your own resources – savings or family.

5. You may need to raise finance against your company assets – however, this is not a cheap option and you lose title to the assets until you pay off the finance but this is better than facing your company going into liquidation.

6. An alternative form of financing that will provide immediate cash if invoice factoring or discounting.  This effectively means selling our invoices to a funder who will provide you with 75 – 85% of the invoice value immediately.  It’s not a cheap option but could tide you over until your finances are more settled.

7. If you’re unable to raise additional finance, then get in touch with your suppliers and as them to consider deferring your payments.  If you’ve been a good customer until now, they may be willing to do so rather than lose your custom in the future.

8. Ask HMRC for extra time to pay PAYE, NI or VAT.  HMRC are more alert to when arrears become due as a result of the Real Time Payment Scheme but they are more receptive to requests for time to pay nowadays.

9. Don’t be afraid to seek professional help – whether this is from your accountant or from a debt collection agency which will deal with your debtors for a fee.  Look for a no-win, no-fee collections agency.

10. Don’t spread the word if you can help it.  Only discuss your business finance problems with those you trust and believe will be able to help you.