If the Carillion collapse has highlighted one thing, it’s that small businesses need to have access to the relevant finance for their needs.
Small firms that are owed money by Carillion have now been confronted with cash flow issues, meaning that many jobs have been put at risk. The government has responded quickly to help the small businesses that have been affected, but what can we learn from the Carillion crash in terms of finance?
In order to avoid becoming supply chain casualties, SMEs can take a number of actions.
Firstly, they need to look out for red flags and classic warning signs.
In the case of the Carillion, there were a number of things that pointed to the fact that the company was in trouble. Firstly, the fact that the company was taking up to 120 days to pay suppliers, with 30 days being the standard.
Another sign is the fact that some SMEs in the supply chain were quoted as saying their invoices were routinely being questioned on the grounds of the quality of the work or goods provided.
Both of these factors are classic hints that a company could be in trouble, and SMEs need to consider how this could result in negative side effects for them, including cash flow problems.
How to stay in control of your finances
When it comes to managing your SME, there are a number of things that you can do in order to stay on top of your finances. Firstly, it’s really important to have a financial plan that factors in any type of financial difficulties that you may run into.
Understanding your financial position is also really important, and what this means is that you are constantly aware of your outgoings and how much money your business has. Consider signing up for internet banking and getting an app on your phone that will allow you to constantly track your finances.
How we can help SMEs
We have a number of financing options available that can help SMEs sustain themselves and grow. We offer business loans, overdrafts and expansion capital from trusted lenders and always take into account the individual circumstances of every SME that we work with. To find out, more visit our website.