Businesses can experience financial trouble at any stage in the lifespan of a business. While we all hope to see brighter days ahead and plan accordingly to ensure we do not end up in financial troubles, life isn’t always so kind. As the economy faces many disturbances and pressures, so does your business and in turn your client’s business.
There are some early warning signs that you can be aware of if any of your clients are experiencing financial difficulties. As a business owner you have many decisions to make, and how you handle these troubles can be a complex problem to navigate. Armed with the facts and what to look out for, we at My Debt Recover prefer a human approach. We work with you and your clients to find the path of least resistance. So let’s see what you can look out for to help better prepare you for the future.
How a client in financial trouble can impact your business
There are many ways a client who is experiencing financial difficulties can affect your business. The main one, and most important one is a loss of income for your business. When people are experiencing financial trouble, cuts have to be made. Within these cuts services are reduced or even removed altogether. As a business owner you may be on the cutting block for some of the reductions your client is having to make.
Another way a client’s financial troubles can impact you is another type of loss of income. If your clients do not have the capital to pay you, you are saffeld with unpaid debts. These have massive impacts on your business, read about the impact of unpaid debts in our blog here.
The early warning signs to look out for
There are several early warning signs to look out for that show a client might be in financial trouble. The first sign is delayed payments. Now we are all human and sometimes we might forget a payment deadline, however, there may be something more sinister at the root of this delay. If your client is struggling with cash flow, they may be paying you a day or so later as they are working to collect that money before paying your invoice. This means they do not have the “disposable” cash flow to pay their debts before they have received their own payments.
Another early warning sign could be complaints or discrepancies raised by the client to bring the total amount owed down. If you know your service is on point, and you supplied your client with exactly what they wanted the most would be happy to pay. Those who are struggling with financial trouble may be looking for ways to reduce their expenses. By requesting cuts and discounts it could be a sign of more financial troubles.
What your options are for dealing with clients in financial trouble
So what can you do when your clients are dealing with financial difficulties? One route is to open up a dialogue with them. When you are open and transparent with your clients they are more willing to open up back. Having a conversation around money isn’t always easy, trust us we know. But it is necessary to understand where your client is at and can open up the potential for solutions. Perhaps you are able to offer them payment terms? This can make it easier for your client to manage their finances while you still receive payments.
There are many steps you can take before you have to result in court judgements. Here at My Debt Recovery we work with you to find the best solution possible. Our team of experts are dedicated to providing the best solution for you and your clients. Contact us today to see how we can help.