Surviving The Credit Crunch

With the recession and credit crunch in the news, feeling nervous about the future is not unusual and may even be considered sensible. Here are several tips to surviving the credit crunch, ensuring that your business can get avoid from the financial crisis.

Watch the cash closely

Make cashflow the main concern in your deals. Try to maximise your cash in and minimise the cash out wherever possible.

Make realistic cashflow forecasts

Ensure you know if things will get much tougher in the coming months so that you can be ready for them

Look at where you are spending as well as consider the worth

Many firms gather a lot of small recurring expenses along the way and they can easily be forgotten about. By reviewing these small expenses and getting rid of the ones not actually needed, you can save a lot of money.

Look personally at the working capital.

In tough times, customers will stretch and try out their payment terms and suppliers may push for the early payment. Try to renegotiate payment terms to be more favourable to you.

Credit check the customers

You do not want to get caught by a customer going under while still owing you a large sum of money.

Review your marketing

If you are still using the marketing messages made for an instant growth boom market, you may perhaps need to reconsider the present financial climate.

Watch the fixed costs

The toughest thing in the recession is managing the unavoidable fixed costs. The longer you are tied in, the less flexibility you have. Look at all the options where you can improve flexibility in your expenditure.

Watch out for the frauds

With living and fuel costs rising there is a temptation for staff to take a few extra liberties. It will not affect everyone but there will be a risk of internal fraud, which can have a serious impact on the business. You need to have strong controls and robust procedures in order to prevent losses.

Broaden your customer base

With the potential of firms to go under or reduce their spending, relying on one or two major customers can be very dangerous, especially if they fail or cut back on orders.

As the market contracts, you need to be cautious about breaching any banking covenants and thus finding that all the facilities you were actually relying over are no longer available. In surviving the credit crunch, you must make sure you already have another plan in your credit lines.