It isn’t just consumers who have been financially damaged by COVID19. Many businesses are barely scraping by. Some have been forced to rely on financing and may now have (a lot) more debt than they’d like. If this sounds familiar, then here are some tips on how to tackle post-pandemic business debt.
Get your financial paperwork in order
The pandemic seems to have divided the UK into two groups of people. One group has spent the downtime getting themselves super-organised. The other has lacked the time, energy or general motivation to deal with anything approaching organisation. If you’re in the latter group, then now is the time to sort out your financial paperwork.
Check if you’re getting the best value for your assets
If you have already bought assets, then think carefully about whether or not you still need them. If you don’t, then make a commitment to get rid of them. If you do, then think about whether your needs could be fulfilled in a more cost-effective way.
For example, if you only use something occasionally, would it make more sense to sell the item you’ve bought and just hire a replacement when you need it? If you do want to hold onto an asset, could you make it work harder? For example, could you hire it out to other people when you’re not using it?
See if you can reduce your liabilities
Reducing your liabilities doesn’t just mean paying off what you owe, although obviously, that’s an important part of it. It also means making sure that you get the best possible deal on finance. Remember that your credit-worthiness can change over time. Do your utmost to ensure that it changes for the better. Make a point of checking regularly for refinancing opportunities.
Investigate bartering options
Bartering may sound old-fashioned but it can actually work very well in modern business. Just make sure that you understand how to create a barter invoice and how to calculate and report tax. You can sign up for a formal barter exchange and/or just contact potential candidates for a partnership.
Sort out your cash flow
Hopefully, 2021 will be an easier year than 2020. It is, however, still looking like there could be tough times ahead for businesses. This means that you absolutely must do everything you can to set yourself up for success. For many SMEs, that means prioritising cash flow above all else. Here are some tips.
Look at your billing systems
First of all, look at the technology you use and ask yourself if it’s still fit for purpose. If you’re happy with that, then look at your business processes. Ask yourself if you’re really doing everything you can make your billing go as smoothly as possible.
Are you remembering to raise invoices promptly? Are you following through on non-payment issues? Are you actively encouraging your customers to pay as quickly as possible? If you can’t afford to offer a discount for quick payment, can you offer another inducement, like entry into a prize draw?
Look at your payment systems
This could potentially be a huge win for some businesses. In simple terms, the UK has three main payment methods. These are payment cards, e-wallets and direct debit. You can add on cash and crypto as niche options.
All of these options are available to SMBs, including direct debit, so make the most of them. Think about what kind(s) of business you do and what payment method would be best suited to them. Then do your research and get the best deal.
Stay on top of credit control
Credit control can have different meanings in different businesses. In some businesses, it’s literally managing credit. In others, it’s avoiding chargebacks. Whatever it is to you, make sure that you do it.