The biggest single risk for small businesses is cashflow. Conversely customers who pay their bills are the most important ingredient for business success. Cashflow and customer development are therefore vital aspects of risk management in your small business.
Many concerns about cash management can be significantly reduced if the business has a strong customer development policy. If the business focuses on developing customers, in most cases, the business will enhance its cashflow prospects.
- Does your business have a customer retention system for new and current clients?
- Do you communicate pro-actively with new clients? You need to advise them of your terms of trade (especially if they are a credit customer).
- Do you obtain up-to-date details of all new clients? This ensures that they’re on your mailing database for promotional brochures, and so on.
The best new customers are the ones that pay on time. To avoid taking on risky customers do your homework, perform a standard credit check, ask for trade and bank references or even request a Directors’ guarantee (if the customer is a company).
* Business Forward #53