Cash flow. I had a big deal that I wanted to land at the beginning of this year but needed £1,500 to secure it. When I approached the bank they would only lend it to me if I put my house on the line. I was absolutely not willing to risk my house on such a small overdraft.
I have learnt in the past that cash flow is always going to be a problem for a small business, especially in the early stages of its lifecycle.
Instead, I raised the money from friends and family. Not only did I secure the deal but I didn't have interest to pay either.
To overcome any cash flow problems more generally, I have made sure that I keep a good customer base. I have never felt the need to offer discounts or even incentives to encourage customers to pay on time because all it would take was a follow-up phone call. I have consciously whittled down my clients to ensure that they are reliable and trustworthy.
If clients have taken 90-days or longer to pay an outstanding account, I send them a letter asking them to pay promptly or their account will be limited to cash-only accounts. I always follow up with this, because I need to ensure that I have a reliable customer which means reliable cash flow.
You do, however, need to be understanding on the size and structure of the business you're dealing with as well. With many larger companies, it takes around 60 days for an order invoice to go through their systems.
I would definitely suggest in investing in a good credit agency. Look out for one that takes all aspects of the business into consideration. Credit agencies will check out a business for you, and make a decision on whether they are a safe client and likely to be a good customer. This has often given me insight on a company that I wouldn't have had in general dealings with them.
Don't take anyone at face value. My best advice would be to be wary of people trying to spin you a yarn. There have been many times when clients have assured me that the 'cheque's in the mail,' but it is best to be discerning about how a company or person might portray themselves.
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