As interest rates rise yet again, businesses across England and Wales may find themselves feeling the squeeze, as a credit crunch looms.
In an environment where borrowing costs are going up, managing cash flow becomes even more critical.
This situation is especially challenging for businesses that rely on credit to fund operations or planned expansion. Higher interest rates mean higher monthly payments and the willingness of lenders to lend may tighten.
For businesses to give themselves the best chance of getting through this period, boosting their cash flow can be vital to maintain financial stability.
Getting invoices paid quicker is an obvious and practical way to boost that cash flow.
The Importance Of Positive Cash Flow In Testing Times
When access to finance starts to dry up or becomes too expensive, businesses will start to tighten their belts. If your business invoices for goods or services provided, you might notice clients starting to pay slower.
Slow playing clients can restrict your ability to pay your own liabilities. The more effort you make to get clients to pay on time, the better prospect you have of getting through this difficult period.
Cash flow is the lifeblood of any business. It is what allows a business to pay its bills, fund its operations, and invest in its future.
By tightening credit control procedures, businesses can reduce the risk of bad debt and improve cash flow.
Can You Remember The Last Credit Crunch?
The term “credit crunch” is often used to describe a situation where there is a sudden reduction in the availability of loans or a sudden increase in the cost of obtaining a loan. While we’re not in a credit crunch scenario just yet, businesses must be proactive to avoid finding themselves in a tight spot.
As interest rates rise, businesses must be proactive in managing their financial health. This includes reviewing and improving credit control processes, focusing on maintaining positive cash flow, and preparing for potential debt recovery scenarios.
In such testing times, SV Legal Training can help you to improve the credit control process and how to take a client to court should a client fail to pay an invoice.
With the right guidance and preparation, businesses can weather the squeeze and come out stronger on the other side.