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Cash flow is the lifeblood of a business and when it’s restricted it’s often due to poor debt collection. A robust debt recovery strategy can make a considerable difference to the financial state of a company, however, and allow it to operate with more freedom.
Efficient debt collection systems are easy to implement and should be conveyed to all staff members involved in this business area. When a company operates in a unified way its chances of success improve and debtors know that their late or non-payment won’t be easily tolerated.
It’s also important to be proactive rather than reactive where debt collection is concerned, as acting too late can lead the business into severe financial difficulties. So why is effective debt collection so important?
More working capital to function day-to-day
Having sufficient cash to operate the business day-to-day is fundamental to survival and provides the foundations for a company to thrive rather than simply surviving in its market.
Monies to implement strategic plans
Company cash flow needs to be reliable to map out and implement strategic growth plans. Without strong debt collection procedures in place, the business cannot take growth for granted.
Better credit rating
If the company cannot collect its debts it faces the possibility of falling into arrears with its own liabilities. Being able to pay the bills as contractually required allows the business to maintain a good credit rating and can provide broader access to finance with favourable terms.
Avoids financial distress
It’s easy for a company with poor cash flow to experience financial distress and slide into insolvency. Collecting debts efficiently supports business finances and provides a buffer against potential liquidation.
Improved customer relationships
When a business has a trusted system in place to collect payments and methods to avoid bad debts, such as offering a discount for early payment, it can build trust with customers and improve relationships for the long term.
UK Business Finance can offer reliable independent advice that’s tailored to your business, helping you to improve your debt collection results where necessary. Please contact one of the team to arrange a free consultation and let us get your business onto a firmer financial footing.
We work across a wide range of sectors throughout the UK, providing specialist advice to each sector.
What can company finance be used for?
Business finance can be used for a multitude of purposes within a company, from boosting general cash flow to funding development projects and buying stock. Its flexibility and adaptability to an individual business’s needs make it ideal whatever stage of business you’re at.
Management buy-in financing options
If you’re considering being part of a management buy-in (MBI) or you’ve decided to sell your own business to an incoming management team, there are several ways in which the transaction can be financed.
Can I get business finance if my company is insolvent?
If your company is insolvent, it’s vital to stop trading straight away and obtain assistance from a licensed insolvency practitioner. The insolvency practitioner’s role at this point is to assess your company’s financial situation so that they can provide guidance on whether additional finance is appropriate.
Can’t pay company bridging loan – what are my options?
A bridging loan is a form of short-term finance that lasts for up to 12 months. It provides vital funding between transactions when a company purchases one property before the sale of another has been completed.