Fail to keep the cash flowing and you can wave goodbye to your business. In his latest article focusing on real challenges faced by real entrepreneurs, Edward Bodiam explains how he sorted out a client's credit control problems.
The client
The company is in the service industry supplying professional services to around 300 customers. There are 26 employees and 3 shareholders; the turnover is approximately £1m and the business has reasonable net profits.
The challenge
The issue the client faced was originally something they didn't realise was a problem. The owners had an accountant and a book keeper, as well as an onsite accounts person. They believed that credit control was being undertaken when one person was chasing debts when they were overdue. Their problem only became apparent by accident when we were questioning them about some bad debt write offs on the previous 12 months accounts. It seemed that each year they had accepted there would be quite a large amount of bad debt which they assumed was the nature of their business.
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