How to protect cashflow in your family business

How to protect your cashflow in your family business

Your family business is different from most other businesses. It has a history and heritage like no other. It is unique.  It has a number of loyal customers that have been with your business for a long time.  These customers will be loyal to your business, and no doubt you will repay that loyalty back to them.

However, we are approaching difficult times. There are news reports about us approaching another recession. Your business is currently in choppy waters along with your competitors, and a storm is approaching. Don’t let that loyalty sink your business. Your competitors won’t so why should you?

It is important that you protect the cash flow in your business, and you do so now.  I appreciate this may be difficult given your loyalty to your customers, but if you don’t do so now then your business is under significant threat. Cash is drying up in the economy. And businesses are tightening their purse strings, and only making payment of sums when they have to.

There are some easy steps that you can take to protect your business. Firstly, review your business’ credit control policies.  If necessary, reduce the time that you ask your customers to pay your invoices. Secondly, adhere to those credit policies. Don’t be afraid to contact your customers and ask them to make payment of your invoices as soon as they fall outstanding. Everyone else is doing so in the market place. Thirdly, if any customers resist making payment of your invoices and do not engage with you, then beware. Do not hesitate in escalating matters in those circumstances. A letter of demand and court papers served on your customers can often get their attention and galvanise payment. Taking those steps need not damage the relationship you have with those customers.

And taking those steps need not be costly. If service of the demand letter or the court papers upon your customer galvanises them to make payment, then that whole legal process will likely cost you nothing at all. The costs will be borne by your customer.

To discuss your family business cashflow, please contact David Alexander, Head of Debt Recovery on dalexander@gilsongray.co.uk