Ensuring Business Survival with “Cash flow”

“Never take your eyes off the cash flow because it’s the lifeblood of business.” – Sir Richard Branson

The quote sums up the importance of cash flow and reiterates why the survival of business depends largely on it. Your business spends on salaries, raw materials, rent, and several other expenses, and whatever is left from the sales is your profit. So there – you have money! Right? No, wrong. This is not an amount that is going into the bank for you to spend as you want. As a business you might believe that Company X is making money when it reports profit – is that really money? Customers may have ‘bought’ but if they have not actually paid, where is the cash flow? This is how companies run out of actual cash. The sales staff may have done a brilliant job of pushing products and convincing people to buy. If those ‘buys’ do not turn into cash companies often entrust the sales personnel to chase for payments, which takes them away from their core job. Collections as an exercise, is not one that comes easily to personnel not trained in this crucial activity, which is why companies must start looking at professional help.

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We are not implying that profits are inconsequential or insignificant, but cash flow is a lot more important. In the current world crisis, almost every business is suffering a downturn, and if you do not have loads of cash to fight the uncertainty you would be in trouble. Simply being profitable will not allow you to go the distance – in fact only profitability and no cash could mean bankruptcy. Overdue payments and long term debtors can be the undoing of several companies, and few are able to find a solution. The fact is that once payments become overdue by 180 days, a company runs a 50% risk of not getting paid at all and if a company has too many of these it will soon falter or be forced to accept a lower sum as a settlement.

Wise to Use Professional Help

Under normal business conditions the top line of a company – CEOs and CFOs – does not have the time and it is not in the purview to chase overdue payments. The task is left to the sales heads and their teams, and as mentioned is not a task they are equipped to or happy to handle. The fact is that debtors are so given that they may not intend to pay or may not have the money to pay, and hence without repeated follow up and reminders this ‘defaulter’ is unlikely to pay.

Using professional help to increase cash flow is a profitable and healthy decision under all business conditions, and especially during a world economic crisis. Here are some of the reasons to use a company excelling at and with years of experience in cash collection:

ü They help to increase cash flow

ü Reduction in both real and notional interest costs

ü Helps the CEOs, CFOs, Sales Heads, and Sales Teams to focus on their core jobs

ü Allows the business to focus on core activities and grow faster

ü The cash collected can be pumped back into the business for accelerated growth even in times of crisis

ü Lowers the list of debtors on the company’s books

ü Actual cash to run business as opposed to ‘profits on paper’

In Conclusion

The truth is that every business will inevitably land up with debtors for whatever reason, and this would be more pronounced when the world’s economy hits rock bottom. Bad debts and unpaid dues may seem inescapable irrespective of the industry, and they could seriously hamper growth due to restricted cash flow. This is true of both small and big companies, with smaller businesses finding it harder to sustain in the face of blocked cash flow, leading to the complete ruin and closure of the business.

A debt collection professional company can help to reduce debtors even though organizations may have exhausted every internal strategy to recover their money. Additionally, a holistic services providing company would provide analytical, operational and implementation support to organizations by working with them to liquidate old and aged debtors and convert them to cash flow. They help save money and time, while maintaining cordial relationships even with defaulting clients. Most importantly, such a professional company helps your business survive through a crisis by bringing down debt and risk. Connect with us and we will be happy to help instantly.

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