No one likes to lose money. And as a collection agency that serves all types of business, we can certainly attest to that fact. We have never found one business in all our years helping others that liked to part with their money. And in many cases, it can be avoided if you are prepared and you plan out your business and your growth.
Protecting your business from a financial loss can come in many forms.
We have all met that insurance guy that might be kind of a pain. But the fact is, one of the best ways to protect your business from a financial loss is to have the right insurance as well as the right amount of insurance. It can make the difference between staying in business and closing your doors when you have the right insurance.
Your insurance professional should be just that, a professional and understand your business and take the time to recommend exactly what you need. That person should meet with you on a regular basis and do a review to make sure that you continue to have adequate coverage. Insurance can be confusing so make sure you understand everything you are signing.
Don’t hire too quick:
You may be growing but you really should make sure your growth path will sustain new hires before you bring on more talent. If you hire new staff and then don’t have enough business to sustain that talent, you’ll be paying them and not yourself. Also, hiring new employees and then having to either cut their hours back or lay them off will only cost you even more money in possible unemployment payments.
You have to make sure you’re getting paid on time for the services your business offers. If you have read anything we say, you know that lack of cash flow is one of the most damaging ways you can suffer a financial loss in your business. And the top way in which cash flow takes a hit is customers owing your business money. Make sure you have the internal systems to invoice on time and on a regular basis. Have a system for those late-paying customers such as a schedule of follow up letters and calls and make sure you have a plan for what’s next when customers don’t pay.
Having a standing relationship with a reputable collection agency is a must if you have a regular flow of those that don’t pay. Make sure you are using a collection agency that treats your customers with respect and make sure that agency mirrors your values. The best collection agencies are ones that offer a low cost system and that offer fair treatment to everyone.
You should sit down with an attorney and make sure you are in the right business structure. There are many forms of structure for a business from sole proprietor to several types of a corporate structure. Your attorney will research your business and industry and offer you a solution that is best to protect your assets. Make sure you are getting advice form an attorney that specializes in this type of law. Not all lawyers are created equal and each one has their specialty when it comes to law practice.
Loss Prevention Systems:
Depending on the type of business you are in, you’ll want to invest in some type of loss prevention systems. Any business is at risk of having funds used inappropriately or shifted without authorization and your business needs to take considerable precautions to make sure you don’t fall victim to any type of internal fraud.
Start at the top and make sure you have solid accounting systems in place. If you do not have an internal accountant or CFO, hire one on a temporary basis to help you create systems that are locked down. There are plenty of temporary CFO’s out there for short term projects.
Depending on your type of business and how cash and other payments are handled can determine your systems. Make sure these systems are created for the entire organization. From ownership and front office all the way down to front line staff.
One clear way a legal professional can help you is by reviewing all your contracts, both the ones you issue to clients and the ones in which you receive from vendors and others. Make sure you have an attorney you trust and one that is well versed in contract law to go through all your signed agreements. Have them clearly lay out anything that may cause you to take a step back and of course anything that could harm your operation financially.
Having systems in place for any type of financial loss will go a long way in preventing any unnecessary loss of money and reputation.
How do you protect your business? Tell us in the comments.