All businesses can go through a tough time, and sometimes things get can take a turn for the worse, resulting in insolvency and sometimes bankruptcy. However, you can take steps to prevent this happening. There are many tips to avoid insolvency and here we will examine a few of them to see how they can help.
To begin with, you’ll never know what’s coming if you don’t make regular assessments of your business’ progress. You should ideally be working to a business plan, so it’s good to assess your finances when you review your plan; but if you’re not, you must make time to do this regularly.
Assessing your finances allows you to calculate just where you’re losing money and how you could minimise the damage. As with all business, it’s a question of income and expenditure. If the difference between these two is becoming increasingly difficult to recognise then you need to make some changes.
The changes needn’t be huge to make a significant difference.
Check your stock more frequently and make sure that you are only ordering in what you need. This extends to office supplies too; every little bit helps.
If you provide goods and services to people before receiving payment, you could perhaps begin to change the deadlines that payments are due to be received.
This will enable you to keep a closer eye on what you are owed and it will also encourage your clients and customers to pay on time.
Offer a small bonus or discount to those customers who pay you on time.
Chase after those who owe you money, or consider employing the services of a debt collection agency if you are owed large sums of money.
You could consider renegotiating your credit with your creditors to buy yourself more time.
Don’t continue to take orders that you are unlikely to be able to complete in an attempt to make more money. This is a false economy and will only lead to you upsetting customers and damaging your reputation.
Put restrictions on overtime and consider reducing staff hours if you need to.
If you have large premises you could consider letting out space to other businesses.
If you try to implement some of the changes above, you could manage to get yourself through a rough patch. However, if you continue to experience financial difficulties, then the most important thing to do is to seek out and accept professional help in order to prevent insolvency or worse.