Will Your Customers Pay You?

–  The failure rate for firms with a negative cash  flow is 214% higher than those with a positive cash flow.

–  More than 80% of business failures are related to cash flow pressures rather than general business performance or poor sales.

–  Smaller firms (those with up to 20 employees) are more likely to experience a negative cash flow compared with their larger counterparts

Thanks to an article in the Weekend Australian: 27/03/10, which quoted a study on cash flow, conducted by Dun & Bradstreet.

If your business has been fortunate enough to incur no bad debts consider yourself very lucky – and unusual.

You are in a minority.

Lauren Ross from EC Credit control says…

“When referring to Bad Debt in small business, we don’t use the “IF” word, it’s more a case of “When”. Bad Debt can happen to even the most vigilant of business owners/managers.”

One of the ways small business owners can “insure” their cash flow coming in, is by implementing “Terms of Trade” into their customer contracts.

What can you do, without Terms of Trade in place, if your customer decides not to pay you?  Very little indeed.

Can you:

– give your debtors a bad credit rating;

– make your debtor liable for all debt collection costs;

– take a mortgage or security over your debtor’s assets;

– limit your own liability to the costs of goods or services you provide?

TERMS OF TRADE will allow you to do this and more……

Thank you Lauren Ross of ECControl for this valuable information.

If you would like to know more about “Terms of Trade”, please control Lauren Ross directly on 0419 195 599 and mention this article.  You can also take a look at their website: www.eccreditcontrol.com