Is Your Client Too Big to Fail?
There is a certain amount of comfort to having larger business clients you tend not to get from dealing with smaller more volatile businesses. This often comes from the false belief that this sort of client is too big to fail. Unfortunately, this belief can be misplaced leading to complacency and lack of planning for what might happen if the big client goes bust.
Carillion is one high profile example of exactly what can happen when a large company that is seen as too big to fail goes down and takes various other sub-contractors down with it. Yet the signs would have been evident beforehand that Carillion was a business in trouble if only those businesses affected had taken the time to spot them and plan for the catastrophe that unfolded.
If your business is currently heavily reliant on one big client here are some tips on reducing your own business risk exposure.
Keep an eye on credit limits
If you have a regular payment agreement with your customer and they fail to keep to the deadlines you set then this should set alarm bells ringing. Ask yourself is the company struggling with cash flow and unable to pay? Continuing to extend credit will only increase the risk to your business operation.
Run regular credit checks
If you business survival depends on one major client, you should check their credit information regularly to ensure their business is in a healthy position.
Plan for eventualities
Recovering debt is not as expensive as you think but you will need to act fast to recover money. Having a plan in place to such as using a debt recovery company will help you recover debts quickly and avoid having to write off invoices if a business subsequently enters insolvency.