As the recession continues to extend into 2010, we continue to be inundated by news about the challenges that face the small business community.
While we are not completely out of the woods in terms of the economy, there are several things that small business owners can do to protect their businesses during these challenging times:
Manage Collections: Outstanding invoices should be aggressively followed up on round-the-clock. Having unpaid invoices will create instability. Be aggressive and assume the worst.
Collect Upfront: Make sure that all of your contracts stipulate payment upfront. Net 30 can stretch into Net 60, then you are stuck doing work for 2-3 months without being paid.
Turn Unused Equipment into Cash: Do not let any unused equipment sit around…turn it into cash immediately.
Limit Company Credit Cards: When only necessary, provide your executives with corporate credit cards. Don’t give them out to your entire staff and never give out debit cards to your employees.
Managing Account Payable: You want to keep as much cash in the bank at all times. As such, pay only critical vendors first, then pace vendor payment with receivable collections. Stay away from regular payments on credit cards. You can dig your business into unnecessary debt in no time.
About The Guest Author: Douglas R. Palmer is the Founder of Palmer Financial, providing accounting and finance services to small and mid-sized companies. Palmer Financial helps clients plan, execute and grow through the ongoing evaluation of strategic opportunities.