Small businesses given cash flow warning
With 50,000 small businesses closing each year, managing cash flow becomes an essential part of running a successful company.
Late payments in particular need special attention - especially given that Bacs suggest British firms were owed as much as £14.2 billion from unpaid invoices last year.
Around one third of businesses have said they regularly need to chase for payments and this could be an early warning sign of business failure.
Figures from the Wow Company showcase that two thirds of companies only have enough finance in reserve to cover a period of three months or less.
The key for business owners is watch their figures, especially among smaller firms - of those with less than 10 employees, nearly half could not identify their break-even point.
Should a business not be profitable and lack cash reserves, it could be on the verge of insolvency if action is not taken.
This means tracking everything from orders and margins to expenditure and expenses in order to recognise a potential problem before it occurs.
At the same time, this can aid growth as business owners can recognise when opportunities are there and will know there is finance available to support it.
Alternative finance options may also be an option for those in difficulty or considering growth, as there are a wide range of choices available with various types of funding, costs and structures.
Business owners can also make themselves less vulnerable to late payments by checking their processes and agreements.
Tackling payment processes is essential as businesses should actively chase when they are owed money, even if they feel it might damage relations with clients - the longevity of the business may depend on it.
Those that keep a ledger of what is owed, and when invoices were sent, can then use that information to their advantage when chasing payments.
For those that still have concerns over their finances, an independent business review may highlight areas to focus on, or parts of a strategy to alter.
By Phil Smith