One Reason Why Your Suppliers Might Ditch Your Business – And How To Avoid It

A domino effect

Of course, a less-than-impressive set of figures will be a disappointment for any kind of SME. But have you considered how this affects your supply chain?

The problem is once you’ve filed those accounts, numerous credit reference agencies pour over them and appropriate a level of credit.

It’s mystery to many of us how they decide on these scores.

The frustrating thing is that this kind of information can feed back to your supplier. And no matter how good your relationship, they will always be the one to make the decision on whether to continue working together.

Image

Walking into cash flow hole

Let’s be honest, we’re in economically uncertain times right now. Losses and a weakened balance sheet are familiar pictures for many hard-working SMEs.

A poor set of accounts can potentially have an immediate impact on your most important suppliers. They may initiate those uncomfortable ‘it’s time to part-ways’ conversations as you are now over your newly-reduced credit limit.

And then you find yourself in a cash flow hole.

All is not lost, there are options

If you’re expecting to lose some flexibility with your suppliers because of credit issues, there are steps you can take to help reduce the impact:

1. Nip it in the bud

Speak to your key suppliers as soon as you can and keep them informed of how the business is doing.

Be honest. Make them feel they are key partner and share with them your sales successes and projections. A close relationship where they are regularly appraised, including supplying them with your management accounts if necessary, may give them the comfort to leave the limit in place.

2. Seek extra cash flow

If however, they are forced to cut your credit limit, you will need extra cash flow into your business to meet new orders. Whilst seeking an increase in your overdraft may be more problematic, you still have other options.

You could offer an incentive e.g. a settlement discount for early payments, ideal for your larger customers.

Or you could seek alternative forms of funding such as Invoice Finance (which includes Invoice Factoring or Invoice Discounting).

The beauty of invoice finance is that the facility is linked to your sales, which grows with your business. Hence the more sales you achieve, the more cash is available to pay for the increased goods you need to purchase.

Just imagine if all your customers paid you within 24 hours - you wouldn’t need large credit lines from your suppliers.

That’s what an invoice finance facility can do for your business.

Factoring companies are less concerned about historic financial accounts, more the underlying security of the debtor book and how your business is currently performing.

Plug the cash flow hole

Hence, they can often provide a much more flexible solution than a traditional bank overdraft.  It means that invoice finance is an excellent way to plug that cash flow hole.

So, whether your accounts are little sparklers or complete duds, why not see if invoice finance is a better way of funding your business.

“As a company we have been dealing with Mulberry Asset Finance for the past 10 years. We have found them to be so easy to deal with, they make things so simple and effortless, leaving us to concentrate on the day to day running of our business. Their help and advice have been instrumental in our growth and development of the business. Long may it continue!”

Mike Cooke, Managing Director, Breed Clean Ltd

“I have used Mulberry Asset Finance for ten years. They provide an excellent service for my business and I can access finance to buy the various wagons, machinery and other equipment that I need to run my business. Finance is agreed and arranged within one week, I highly recommend Mulberry Asset Finance.”

Jimmy Dickinson, Director, J Dickinson Transport Ltd

“I had a coffee coaster with Mulberry Asset Finance on and decided to get a quote from them along with two others. They responded immediately with a quote. They gave a personal touch, whilst remaining competitive and efficient. I have now used them twice and found them a delight to deal with.”

Dale Benbow, Benbows Bros. Timber

“A & H CARLISLE LTD have used Mulberry Asset Finance since 2012 and I can’t speak highly enough of Mike and his team, they have helped our business grow and their knowledge of a customer needs is impressive. They are always competitive and quick to react to our needs. I wish Mulberry Asset Finance continued success and hope to do business together for many years to come.”

Alan Falder, Managing Director, A & H Carlisle Ltd

“The service provided by Mike was exceptional in terms of turnaround time, attention to detail and level of communication throughout the transaction. The consequence of this high level of service is that I approached only Mike and no other supplier to organise funding for my latest capital purchase, which again was handled impeccably.”

Richard Grice - W A GRICE Livestock Haulage Hay & Straw Merchants Livestock Agents est 1903

“I have used Mulberry Asset Finance several times for the Hire Purchase of coaches. I have always found their speed of operation and personal attention very satisfactory and I would not hesitate to use them again in the future.”

Barry Pickthall (JB Pickthall Coach Operator)

“Dundee Tyres Ltd is a tyre recycling company based in Carlisle, we needed a new machine to continue our expansion and Mike Robinson from Mulberry Asset Finance was on hand to assist. Our needs were specific and complex as the machine was sourced from overseas and was bespoke to our needs. The purchase went smoothly, and I would not hesitate in recommending Mulberry Asset Finance to any other Cumbrian Businesses.”

Simon Pluckrose, Managing Director, Dundee Tyres Ltd

“Mulberry Asset Finance have helped significantly with the growth of our Artisan Bakery over the past six years. In the early stages when growth and finance is most difficult, they were able to help us acquire the equipment we needed. I am reassured that Mulberry Asset Finance will always get us the best deal without any fuss, allowing us to concentrate on the business and not have to worry about funding for new assets.”

Aidan Monks, Owner, Lovingly Artisan
Funding Circle FSB Member NACFB Chamber of Commerce