How to Control Business Profitability by Minimising Risk

You can work extremely hard to make your business succeed, but unfortunately one of the most frequent causes of business failure is caused by the financial effect of debtor default.
We are sure that you are well aware that mismanagement of cash flow is the single biggest reason that many businesses get into difficulty and often go out of business. Maintaining a consistent cash flow, avoiding bad debt and minimising late payments are vital for business success and survival. It is essential, therefore, to have a comprehensive and effective credit control system as an integral part of any business.
If you think about the legal implications, the management time used in dealing with credit control incidents, the loss of productivity, and the financial implications, it will come as no surprise that many businesses like yours are looking for specialist help and advice.
Once you are aware of the particular risks your business faces means that any action you take will be more effective and therefore more secure. How can you be sure that you are adequately protected?
At BiB our aim is to help you manage and reduce your exposure to risk, specifically when it comes to the credit control risk management arrangements for your business, helping you to minimise the risk you face from negligence and criminal activity.

So how can we reduce your exposure to this risk?

Unfortunately, it’s a common feature that many businesses often overlook the need for a comprehensive credit control risk management programme to their cost. Effective credit control risk management looks at every possible impact on your business, and knowing the particular risks your business faces means that any action you take will be more effective and therefore more secure.
In fact, there are a number of factors which will affect the risk management measures you adopt; such as debt recovery processes, trade reference procedures, credit checking systems, guarantees and insurance protection, and many more, all of which may expose you to significant risk.
Whatever your business, a well-planned review and assessment of your credit control risk management programme is a proven and effective method designed to protect your valuable investment.
To give you some guidance on credit control risk management, we have put together an outline below of the main areas you should take into consideration in order to reduce your exposure to risk.

What you should consider
We would recommend that you carry out a thorough examination of both your premises and operations, closely evaluating any areas which may leave you exposed to significant risk. This will highlight any areas which could cause problems to you and your staff, enabling you to:

Identify the areas in most need of attention.

• Evaluate the scale of risk.


• Ensure that you have adequate arrangements in place.

Some important areas you need to consider when assessing your exposure to risk:

• How much of your business is placed with one or two large customers?


• What is the maximum debtor value as a proportion of turnover?


• What is the maximum permitted credit period before action is taken?


• Are trade references taken up before opening new accounts?


• Are credit references always taken up?


• Do you have credit limits imposed for each customer?


• Are secure guarantees or insurance protection in place for debtors?


• Are goods despatched or services provided prior to payment?


• Do you have secure measures to retain title of goods until payment is received?


• Are financial and other references taken on key suppliers

This is a brief overview of some of the issues that could affect your business to a greater or lesser degree, depending on how you manage them. We can help you examine these areas in a well-planned and detailed manner, identify your level of exposure to risk and develop an organised, cost-effective risk management plan.
All of which gives you greater control of your business performance, profitability and success.

What should you do now?

If you would like to find out more about managing the risks associated with credit control, then please call us on 01325 353888 and we will be happy to discuss this important issue with you in greater detail. Alternatively please email us on webenq@bibinsurance.co.uk