How to prepare your business for the second credit crunch
John Burchill, owner of The Legal Director, has put together some tips on safeguarding your business from a double dip or second credit crunch, to make sure that you continue to be paid if anything happens to your supplier or clients. The Legal Director is a small business service offering ad hoc senior in-house lawyers who provide all the legal assistance that your business needs.
To minimise the financial impact of the second credit crunch on your business, make sure that you’re doing all the right things – and that your customers and clients are too.
Here are John’s top tips:
- Check your banking facilities to prepare for any cash flow problems and the cost
- Make sure you understand the terms and conditions of your banking agreements and any borrowings you may have
- Check on your potential and existing customers and make sure you keep on top of what is happening in their businesses
- Review your payment terms and monitor your clients’ payments
- Have you got the retention of title provisions in your terms and conditions? For example, if a business you are working with sells and ships a product that you have contributed to and they have not paid you, do you still own the product?
- Are you in control of your commercial relationships and are you working on the best terms possible?
- Ask for payment from clients up front or on account
- Don’t over commit to long term relationships and make sure you have the flexibility to change suppliers if you need to
- Be prepared for customers or suppliers to go out of business – have a plan B just in case
- Check your exposure under liability warranty and indemnity provisions in any contract you have entered into.
John Burchill
