Businesses have been urged to keep on their toes this holiday season to make sure they’re not left in debt in the New Year.
Prushka, a debt recovery agency, has found B2B debts harder to recover in 2013 as businesses held on to debts for longer than usual.
Roger Mendelson, chief executive of Prushka, said the post-Christmas period is always the most dangerous one for businesses.
“The business sector has been in survival mode for at least 18 months. There has been a real focus on cost cutting, and this has reduced margins for supplies, to the point where profitability has been cut so much that a significant number of businesses are now living on a knife edge,” Mendelson said.
“Post-Christmas is the most dangerous time for businesses because of the additional holiday wage bill, leave loading, and the fact that most businesses slow down or virtually stop for about five weeks.”
Mendelson has a few pre-Christmas tips to help businesses avoid debt in the New Year:
- Plan cash flow now and make arrangements early if an increase in the bank facility is needed
- Get bills out as soon as possible, as your customers will be closing down from Christmas and won’t be fully operational until late January. Interim bill where possible
- Focus on completing orders and billing them rather than getting new orders
- When ordering equipment and supplies, specify that you won’t be paying until mid-February
- Speak to customers who are overdue and get promises to pay
- Offer discounts on accounts that are paid a few days before Christmas
- Defer any purchases which can be held off until after Christmas
- Go through old accounts you’ve written off and refer them to a collection agency that is prepared to take them on
- Refer overdue accounts to your collection agency as soon as possible