Focus on business survival
In today’s current economic climate, Lemon&Co Solicitors, a full service law practice based in Swindon, is helping clients and other businesses to focus on what changes they need to make to maximise cash flow and reduce expenses. There are a number of tools available and businesses need to ensure they are using them all efficiently.
It is vital in this climate that businesses concentrate on getting monies due in quickly and efficiently. Debt recovery is extremely important to ensure good cash flow. This means a strong, efficient and prompt credit control system supported by process for taking court action if necessary. Businesses should also ensure they are making full use of their entitlement to claim interest and compensation for late payment of debts.
Consider whether your standard terms of trade or supply contracts are doing what they should to protect the business. Do you need to change these – for example, do your terms allow you to claim a non-refundable deposit or part payment or even full payment before delivery?
Seeking some form of “security” in contracts with customers will assist in the eventuality of a customer’s insolvency. One powerful form of such protection is a retention of title (ROT) clause, which can simply be included in a business’ standard terms of trade (upon which it contracts to supply to its customers).
A ROT clause in a contract will mean that the ownership of goods supplied by the seller will not pass to the buyer until they have been fully paid for. Therefore, it will be open to the seller to re-claim the goods if the full price is not paid even where the customer has gone into liquidation.
Care needs to be taken to ensure that the ROT clause is properly drafted to protect your particular business, whether in a contract for supply or in your standard terms of trade. Therefore, it is always advisable to seek help from a legal professional to ensure that the clause fully meets the requirements of your business and is enforceable.
Some businesses may be advised to consider the possibility of restructuring in order to cut costs and maximise efficiency.
Business leaders need to make tough decisions and ditch the parts of its business that are a drain to its survival. People are one of the most important assets of a business - provided they are the right people doing the right work that is profitable.
Redundancies may be a necessity to cut costs for the businesses’ survival. Moving employees so that their skills are best used in areas where the business is most profitable. It may be possible to reduce working hours to cut costs. You must check whether the contract of employment allows any such changes.
Provided that there is agreement between the employer and the employee, it is possible for any term of a contract of employment to be varied. In many cases, it may be appropriate for an employer to offer incentives to the employee to enter into new contract terms. Incentives can include a lower basic salary on the basis of increased commission or reduced hours instead of redundancy.
Of course, before any such steps are taken legal advice must always be sought to ensure correct procedures and steps are taken to legitimately achieve your objective reducing the possibility of claims from employees whether you are considering redundancy or changes to your employees employment terms.
Finally, consider re-negotiating your contracts with your suppliers. Can you get longer credit terms? Will your landlord agree to accepting rent monthly or agree to a reduced rental for a period?
The above are only few ways in which to reduce costs and improve cash flow through credit control and debt recovery, tailor made terms of business, employment and restructuring your business. There may be other matters that can be considered depending on specific needs.
This article gives a general overview only and the legal position at the time of writing this article. It cannot be relied upon in any particular case. Specific legal advice must always be considered to include consideration as to whether the legal position contained in this article has changed since going to print. For further information and advice, please contact Nita King or Marianne Johns on 01793 527141 or alternatively by email on Nita.King@lemon-co.co.uk or Marianne.Johns@lemon-co.co.uk.
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<p><strong><a href="http://www.lemon-co.co.uk/article_focus-business-survival.php">Focus on business survival</a></strong><br />
In today’s current economic climate, Lemon&Co Solicitors, a full service law practice based in Swindon, is helping clients and other businesses to focus on what changes they need to make to maximise cash flow and reduce expenses. There are a number of tools available and businesses need to ensure they are using them all efficiently...</p>
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