We all start the new year with the usual well-intentioned resolutions (lose weight, get fit, find love…) but after a few weeks (or sometimes, hours) we are back to our old habits.

In 2017, more than any other year, the outlook both nationally and globally is uncertain. Will the Turnbull Government’s one seat majority last? Will Tony Abbott, like Lazarus, make a comeback? When will the housing bubble burst? Will interest rates go up or down? Will the EU break up? How will Brexit work? …. and that’s before considering how Donald Trump plans to use Twitter to govern.

ASIC Statistics from March Quarter 2016 showed that a total of 2,106 companies entered into external administration, which was, in the case of Court Liquidations, a 40.4% increase from March Quarter 2015. It’s clear that this time of the year is critical for SMEs, and your single New Year’s Resolution should be to not be one of those statistics.

In our experience, the businesses who thrive during this time of year are those who follow these 7 simple steps:

Know who your customer is and what you need from them

• Collections start when the customer first comes on board;
• Know who you are dealing with – have a comprehensive Credit Application Form that provides you with names, addresses, entity details (e.g. partnerships, trading trusts) and references and includes Privacy Act consents so you can carry out extensive credit checks;
• Obtain security (personal guarantees, General Security Agreements etc) where possible. Your best chance of obtaining this is when the customer wants something from you (i.e. a line of credit). If you are selling goods, ensure your PPSA security interests are properly registered.

Work on and build the customer relationship

• Now that you know who your customer is, build rapport and a trusting relationship so that you can assist your customer not only in the harder times but in the better times and help them grow their business;
• Customers love to know what you can do for them so anything of a value-added nature will build customer loyalty.

Build a culture that makes your organisation credit focussed

• Make sure everyone in the business understands the importance of getting paid. Sales make you feel good but nothing makes you feel better than money in the bank;
• Have a defined Credit Policy and Procedure – if you don’t, you will continue to experience cash flow issues.

Identify problems early – and then deal with them!

• Try calling or sending an SMS reminder before the payment is due to confirm everything is still on course;
• If you identify a customer who won’t comply with your Terms and Conditions of Sale, get rid of them;
• Get your sales reps to keep you informed about your customers and any market rumours.

Ensure your reporting systems can give you meaningful and accurate measures of where your business stands

• Don’t just report the same old things the same old way. Question the need and effectiveness of any reports you do – is there a better way this could be done? Visual and graphical representation of financial information can help you quickly identify problem accounts.
• Your IT systems should provide comprehensive details about your customer – payment habits, level of purchases etc. Use your IT systems as a tool to identify those customers who can grow (and grow with them).

Train your people so they can properly perform

• If you think training is expensive, how much does it cost you having untrained people trying to do the job? Train people properly and train them well. Grow them and you will grow accordingly;
• Learn to delegate, you’ll be surprised how people will rise to a challenge. Give your staff the authority to negotiate any payments (subject to your Credit Policy) without recourse to you e.g. write offs, payment arrangements.

Work closely with your service providers

• They will have access to other resources, information, knowledge and experience. Use them as an extension of your team;
• Contact them early, before problems arise, and talk about what they can do for you.

At this crucial time of year, resolve to do something different in 2017 and use these seven simple steps to gear your business for success.

About the Author

Natalie Ledlin is the Practice Director of Ledlin Lawyers, a boutique legal firm of specialist credit, insolvency and business lawyers.