Tough economic times can make you very concerned about the future of your business. However, there are several steps that you can take to improve its chances of survival. The coronavirus crisis has sent shockwaves through the national and global economies recently, so read on to find out more about protecting your business during a recession.
Protect your capital
One of the most important things to do at a time like this is to protect your cash reserves. If you fail to do this, you may find it hard to meet your own financial obligations whilst you are waiting for invoices to be paid. Try to keep hold of enough cash to meet the next six months of costs if this is possible. You could put some of your funds into a savings account to generate interest rather than leaving them in a conventional business bank account.
Tighten up your payment terms
Make sure your contracts work for you. You may need to be tougher on payment terms. It could be wise to charge a bigger penalty for late payments and to check credit ratings before you provide products or services to new customers and clients. It’s also a good idea to ask for a deposit before you start delivering services to new clients.
Use accounting software
Using accounting software can help you keep track of money owed to you. Some of these solutions allow you to send out invoices and reminders automatically. Don’t be afraid to call a client if you are still waiting for payment after several weeks. It’s also a good move to keep on top of your own debts and pay off as many outstanding invoices as you possibly can to avoid extra charges.
Avoid unnecessary costs
Cost-cutting can also help you keep your business prosperous during a recession. Whilst spending money can help you make it, unnecessary purchases can have a devastating effect on your finances. Try to only spend money on goods and services that you’re confident your business genuinely needs. You can also use solutions like social media to advertise your business without overspending on marketing.
Grow your client network
It’s also wise to start looking for new clients if you only sell products and services to a handful of people. If you lose one or two of these clients, things may start to look very bleak. Networking can help you find more clients during tough economic periods, and you can do this both online and offline.
Don’t just look to the UK for clients – there may be more global demand for your products and services than you think. Expanding into overseas territories can strengthen your financial position significantly. There are many solutions available that can remove the stress and strain from doing business with international customers, including multicurrency platforms, FX payment services and many more. Working with global clients can stabilise your business, help you diversify and ensure you always have enough clients to keep your enterprise moving forward. Talk to us today to find out more about FX payments, FX services, overseas money transfer and more.