Like so much else surrounding Brexit, uncertainty is the name of the game. For any business taking steps to prepare, trying to predict the impact Brexit will have on operating cash flow is particularly important.
With no new deal yet agreed upon, and the potential of a no deal scenario, you could be forgiven for fearing the worst.
The UK continues to have a poor payment record, which is exacerbated by the current political uncertainty. Payments are just not making their way down the supplier chain as quickly as they should be, causing pressure and liquidity issues, with particular pressure on operating cash flow.
The positive side of this situation is that businesses still have the time to take stock of last year’s performance and prepare themselves for whatever may be coming. Whilst macroeconomics will play a part in your business risk, with interest rates expected to rise, cash flow is an area you can target and de-risk.
Ways to do this include:
- Making sure you have sound credit control procedures;
- Conduct proper enquiries of your customer;
- Invoice on time and chase debts on time;
- Gentle reminders before debts become due to encourage prompt payment;
- Have regular meetings to review DSO – you can compare this to other businesses in your sector using our DSO comparison tool;
- Most importantly, if there is a problem, it is likely that there are other creditors. Make sure you are at the head of the queue.
With the new Brexit deadline just around the corner, it is a good time to review your aged debts and credit control process to enhance your operating cash flow.
If you’d like to discuss improving your cash flow, please contact our Debt Recovery Team.
Disclaimer: Anything posted on this blog is for general information only and is not intended to provide legal advice on any general or specific matter. Please refer to our terms and conditions for further information. Please contact the author of the blog if you would like to discuss the issues raised.