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.

“I am always grateful for the honest advice that I receive from Mike Robinson at Mulberry Asset Finance & his straightforward approach. It is refreshing to deal with a company that can communicate clearly & who genuinely wants to do the right thing for my business. I will definitely use Mulberry Asset Finance again & I highly recommend their services.”

Scott Burton, MD, Scott Burton Timber Harvesting

“I was very pleased I chose Mulberry Asset Finance to work with on my new poultry business. The whole deal was arranged quickly and, most importantly for me, they did exactly what they said they would do and on time. It is very satisfying to work with people who give you a good deal and who you can rely on.”

Jennifer Bain, Owner, J Bain Farming

“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

“We have used Mulberry asset finance on a couple of occasions as we continue to invest in processing equipment for our company, we have always been more than happy with the service provided by Mike and the team. The process is always hassle free and Mike is always in contact throughout. We will definitely be using Mulberry again in the future.”

James Hill, Director, Enviro-metals Lancaster 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 access to 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

“I have used Mulberry Transport 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 Transport.”

Jimmy Dickinson, Director, J Dickinson Transport Ltd

“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)

“We have been dealing with Mulberry Asset Finance for over 10 years and have always found them to be efficient, courteous, professional and above all very pleasant to deal with. On top of that, they have always enabled us to obtain the type of finance deal that we have been seeking whether it be for capital investment or vehicle purchase.”

Mark Whitehead MBE, Hawkshead Relish Company Ltd
Funding Circle FSB Member NACFB Chamber of Commerce