2019 has been a difficult year for some of the most established businesses. The fall of one of the world’s oldest travel agencies – Thomas Cook, fast fashion giant Forever 21 filing for bankruptcy, and even public favourite Pizza Express confessing its difficulties with its debt this year, it’s clear that even the largest of businesses can fall victim to financial pressures. The similarity being financial management.
In the early stages of starting up a recruitment agency, having well managed finance can be key to the success of the business, especially as the sector is hugely demanding of good cash flow. Therefore, having a reliable financier and understanding debt management long-term is just as crucial as the upfront investment.
R3 reported that in 2018, underlying corporate insolvencies rose 19% compared to Q3 2017, and for every struggling retailer unable to pay its debts, there will be numerous suppliers who come under pressure from the late payments.
Below are some important actions you can take to safeguard your agency:
Perform a credit check on all customers before you start supplying them – that way you can understand how that business has performed and make a prediction about how they will continue to perform.
Effective credit control:
Reducing your aged debt and having your invoices paid promptly is crucial to preventing debt from mounting up. Having a strong credit controller to manage cash flow can help you spot early warning signs!
Debt protection policy:
Take out a bad debt protection policy to protect the business, making sure you still get paid if a customer should become insolvent or are unable to pay the invoices they owe.
Your chosen financier:
Choosing the right financier for your businesses needs is very important when you consider what’s at stake. If your financier were to go into administration, you would need to find a suitable alternative within a week who could buy off all your existing debt and support your set credit limits.
Starting up your own agency can be challenging, especially if you’re new to the industry. However, properly researching the areas above before you decide on a plan can help safeguard your business from future problems.
In terms of funding, there are multiple options out there to help get your business off of the ground. Take a look at what our premium Cash Flo service has to offer here.
To find out more about funding and outsourcing your back office, download our eBook. Simply click the image below...