Preparing for the upturn

Filed under: Contributed Columns |

As business advisors and accountants, we are privy to business owners’ thoughts and actions resulting in those figures.

We are seeing that business owners are ready to come out of hibernation this spring.

Whether they feel they’ve weathered the storm and the economy is on the rise or think there is still time before we see the beginning of the recovery, the prevailing attitude has shifted from hunkering down and surviving to moving forward and taking advantage of the current marketplace.

Key areas to address and prepare for during this transition are:

Debt collection efforts

The area of collections is a tough area of your business to execute. Rarely does one enjoy hounding delinquent clients — especially one that you want to sell to again in the future, but a business needs cash flow to fund daily operations. Remember the vendor who proactively contacts their customers is more likely to collect. The likelihood of collections drops almost 30 percent in the first 90 days.

Instead of waiting until a problem arises, monitor your accounts receivables regularly. Another strategy for managing your debt is to step up the collections process. Consider running credit checks on potential customers or offering profitable clients a discount for early or prompt payments. Also, determine whether you need to hire an outside agency to collect on some of your most delinquent accounts. These agencies usually take a percentage of the accounts that they receive payment on, but can save valuable time, create distance between your sales process and collection process, and may be more efficient collector then you are.

Defer vendor payables

While you are collecting from your customers, your vendors may be missing opportunities to do the same. For those vendors who are not on top of their collections or are offering extended terms for payment — take advantage. At the same time, utilize discounts offered for timely payment. Being liquid when an opportunity arises can be the difference in seizing it or watching it pass by.

Focus on the balance sheet

You trimmed down discretionary spending months ago and are continually working to increase your revenues. Don’t lose sight of your balance sheet in the mean time. There are plenty of opportunities in the market to take advantage of, keep your eyes open to what may apply to your business.

If equipment is an integral part of your operations, you may consider trading in an older piece of equipment for a new machine that offers attractive financing. The result could be newer equipment at a lower overall lending cost and monthly payment.

Other considerations may be to cull the balance sheet of aging inventory or unused assets. Of course, you should be careful when considering whether to sell unneeded assets. While excess property can be converted to cash, finding a buyer for specialized equipment can be difficult, and it may be sold at a loss. Your particular circumstance may not warrant this route. You don’t want to jeopardize the long term success of your business for a quick fix cash infusion.

Keep up with trends

With recent focus being internally focused survival, you don’t want to get caught with your head in the sand. Keep up-to-date with industry specific and general business trends. Small business owners should stay in touch with their industry and local business community. Your fellow entrepreneur is willing to share ideas and small business know-how.

Continuing to learn and improve is part of keeping your business alive. Whether you’re are reading to gain knowledge or attending an Entrepreneurial Corner, part of your focus should be external.

Debt restructuring

Many business owners have found themselves highly leveraged, facing unsavory consequences in the near future and need help addressing their debt.

If you find yourself looking at a potential debt problem in the near future, you need to carefully consider any debt restructuring decisions that need to be made. Proactively seeking solutions for your debt issues increases the likelihood you have time to evaluate alternatives that best fit your situation and results that you can live with.

Deborah Helton CPA is a supervisor at BiggsKofford P.C. She can be reached at or 579-9090.