Early Indicators That A Client may be in Financial Trouble
Let’s face it, along with the rewards that come with doing business; there may come a time when an enterprise runs into financial trouble in its various hues and shades. Your clients may fall prey to this harsh reality, and this may lead to them incurring heavy losses which may prove to be taxing on your part as well.
When such problems begin to crop up, your client may not disclose any word of them to you, but this need not be printed in black and white for you to see the signs. Here are some early warning signs that your client may be facing some tough times. They will help enable you to take a proactive stance with your client and become a problem solver and save both parties from impending doom.
Irregular and untimely payments
This is one of the first signs of financial difficulties. Payments become later and later. To notice this from the onset one should keep a close eye on your credit control records. Sometimes, you may only receive a part payment of your invoices or lump sums in round figures.
This could be a sign of cash flow problems and that your client is paying you only when and how much they can. It is imperative to talk to your customers about these issues and if necessary work out a payment plan so you can recover your outstanding invoices as quickly as possible.
This is another tell-tale sign. Although it is difficult to ascertain short-term profits for your clients, if you’re working with other businesses or if you live in a small community, you may read about or hear about a decline in their profitability. Maybe they’re not getting as many sales or maybe their costs have increased.
Falling profits could be due to decreasing sales or increasing costs. Therefore, try to work out what the profit margin of a business is likely to be and then look for other evidence of what might be happening to profits.
Low levels of morale among the staff
Poor morale is a sure sign of trouble. If people fear for their jobs, or benefits are being cut, or they are overworked, you’re going to hear complaints, so listen out for them.
Staff morale is a good indicator of a company’s financial health. If you have a good working relationship with a company, talk to the staff and get a general feel for what is happening.
It seems like your normally reasonable client goes out of their way to find problems with the service that they received. Sometimes when people are short on funds, they will be seen nit-picking the service they’ve received (regardless of whether their complaints are relevant or unfounded) to get a discount or to at least delay the payment of the bill.
Take a tough stance with these people. They will have more than enough on their plate so won’t want to get involved with disputes they cannot win.
Sometimes, long-established businesses struggle to adapt to a changing marketplace. You can get a good feel for people’s public approval of a company by watching the press, social media and listening to how people talk about the company. Look out for things like comparisons with other companies and complaint. They should point out that the business is losing touch with what its customers want.
A few other signs include abrupt selling of large assets and payment by credit card where the debit card and cash featured.
When you notice that your client is behaving in a manner that is markedly different, check in and find out if things are going okay. Let them know that you are here to help. Your client may weather the storm or may hit the ground, all that matters is that if you see something be proactive and act quickly to help remedy the situation.