How Credit Control can create Cash Flow Confidence
cash flow
Photo Credit: kenteegardin via Compfight cc

The economy is on an upward swing, at least over the medium term, and that means many businesses are seeing more confidence in their cash flow – something outsourced credit control services can help to ensure.

Figures from R3, the association of business recovery professionals, show an all-time low ‘business distress’ rate, although nearly a quarter of companies surveyed reported at least one indicator of distress.

In many cases the problem is not directly profitability, but simply cash flow – 8% of firms regularly take their business overdraft to its maximum, and 11% are seeing falling sales volumes (compared with 10% who report falling profits).

There are clear consequences to this – and 6% of businesses each reported a drop in market share, or having to make redundancies.

However, keeping on top of your cash flow can pay dividends in an improving market, bringing more of what you are owed into your account to reinvest in stocking and innovation, entering new market niches and new channels, and so on.

It is the companies that keep bringing in the cash as quickly as possible that tend to prosper in such an economic environment, as well as being better placed to withstand any sudden shocks that might occur in the short term.

Small and Mighty

For small businesses in particular, it’s been a rough ride, and everybody knows smaller firms are less resistant to economic shock.

But as the economy as a whole continues to improve, the prospects for small firms are rapidly improving too, as the R3 research shows.

In November 2014, 50% of sole traders reported at least one measure of business distress; in the latest figures, that percentage has dropped to just 20%.

R3 president Phillip Sykes said: “Although the largest businesses continue to experience the fewest signs of distress, it is encouraging to see difficulties for smaller businesses easing.

“It’s been a particularly difficult few years for many sole traders and they’re only now beginning to see recovery.”

Outsourced credit control can help small firms that may lack an in-house credit control team – and especially sole traders where you normally have to perform such functions yourself.

Don’t be one of the last victims of the recession when it’s nearing its end – instead, position yourself to capitalise on new growth and new opportunities by keeping as much of your cash flow at your disposal as possible.

If you would like to talk to a member of our team please call 0808 252 5993

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