Protecting Your Business From Bankruptcy

As the economy still struggles to recover, it is more than likely that many more businesses may be
affected by bankruptcy, in one way or another. Therefore, businesses need to make every effort to
better protect themselves. This is best accomplished by consulting professional insolvency
practitioners. As financial specialists, these experts can help advice companies on how to best
weather challenging times.

Financial Planning

Aside from the usual aspects of proper planning, one other extremely critical financial element
is for business owners to protect their companies from the effects of bankrupt customers. 

More than ever, it is imperative to evaluate the financial standings of all customers. This can
ensure that credit administered to them is reliable. There have been literally hundreds of major
public and private bankruptcies filed annually for the last few years. 

Therefore, it is more than clear that regular credit protection methods should include adequate
standards and practices. This can prevent businesses from dealing with potentially uncertain
customers. Below are some steps to make this process easier. 

1. Financial Business Review

Before looking into the financial condition of customers, review your own business situation.
Conduct a thorough analysis to reveal strengths and weaknesses. Determine what the company's
spending habits are and decide where cut backs could be managed. 

Invest business funds wisely and only in areas that are necessary. Not only is this an important
ongoing process, but having reserves in place can also be very beneficial to safeguard the overall
health of the company.

2. Review Competitor Standings

Take a look at how your company compares to competitors. Distil what your company offers that
others do not. Amplify those things through marketing to best leverage them. 

Determine what draws customers and emphasize this in your branding message. Stay abreast of the
target audience and continue to adapt marketing efforts accordingly. This is key to maintaining,
safeguarding and growing the business.

3. Protect Investments

While credit insurance has been popular for small businesses, this traditional form of credit
protection is no longer sufficient. Businesses need to implement their own standards of
protection from unpaid loans. 

For example, institute credit scoring models that identify customer credit standings. This
information will provide guidelines pertaining to whom the business should sell to.

4. Automate Processes

Use automation to keep track of business analysis data. This will not only save time, but
results will be more accurate. Software includes helpful tools for businesses to track trends,
compare competitor standings and make financial decisions that are more informed. 

For businesses, debt recovery can be a very serious issue. Therefore, determining the financial
health of every entity that a company has a business relationship with is highly advisable. This
can help greatly to avoid potentially severe financial losses.
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John Greyson is one of the most knowledgeable guys in town, he knows everything you need to learn
about business and law. Stay tuned for more of his practical tips and legal advices about
insolvency practitioners, visit http://www.redchip.com.au/services/insolvency/ .

Posted by J. Randall Frier