As a business coach I come across a number of businesses that are struggling for cash. The downfall of many small businesses is debt racked up by not paying bills on time. To avoid becoming a fatality the general rule of thumb is to refrain from making unrealistic or impossible promises.
You will find that your customers and vendors will follow suit, creating strong relationships that will keep your business afloat through rough times.
Start off on the right foot and keep creditors off your back by always paying slightly in advance of the due date. Rack up points with your suppliers and let them know you value the relationship. Sometimes you may find that they offer discounts or promotions to businesses that consistently pay punctually.
Negotiate when you can – ask for extensions or offer partial payments. And keep current products in circulation - make sure that you don't suffer from a freeze-out of production. As hard as it may seem, offer cash on delivery whenever practicable and offer back-payments upfront to ensure you don't end up losing days of business.
From a business coaching perspective you should keep communication fluid between you and your creditors or suppliers as well as you and your customers. When a major customer is due to pay, let your suppliers know your timeframe and when you will have the money.
Save your cash when you have it and use credit or loans to buy essential items, but get advice from an experienced business coach or advisor on how best to accomplish this. Cash reserves will ultimately come in handy. When you have cash in hand, make smaller payments wherever possible and prevent a debt hole.
Keeping current on your accounts is a sign that you are handling all aspects of your company with responsibility and accuracy. Falling short can fast become overwhelming, hinder operations and shut you down.
Paying on time keeps your reputation intact which is vital to success. As a business coach I can’t stress enough how important it is to have the stock on hand when you need it. Satisfied clients come back and recommend you to other potential customers. Satisfied lenders, bankers, loan agencies and suppliers will extend the same courtesy when they trust that you are a savvy, organised and trustworthy customer.