Recession Survival in 2009

My wife has a habit of watching television programs that aren't on my top 10 list. As a matter of fact, she is addicted to Dr. Phil, Oprah, and other shows of that sort. The other day, she made me watch an episode of Oprah that she had conveniently DVR'd for me, to which I immediately rolled my eyes. I did, however, get hooked on it because of the topic. Oprah had a guest on her show named Suze Orman who is an internationally acclaimed financial advisor.

What caught me off-guard was the financial advice that Suze was giving American consumers. Things like:

"Pay only the minimum balance on your credit cards."

She was giving this non-standard financial advice to consumers so they can hopefully survive and possibly thrive in our recession. But if consumers are going to be trying to pay only what they are being forced to pay, then it won't be long before businesses won't be paying their bills unless you make them as well.

If a business doesn't pay their electricity bill, their service gets shut off. If they don't pay their rent bill, they get evicted. If they don't pay their phone bill, their communication lines are closed down. But what happens when they don't pay their staffing bill in a timely fashion? Usually.. not much. While the customer is profiting from your labor costs, you are forking the bill and not getting paid. Eventually, your cash flow dwindles to the point where you can't make payroll, pay your taxes, or pay your own occupancy costs and you could lose what you have devoted years of your life to--your business.

So how can you prevent this from happening? 

• Keep a close eye on your receivables and make sure your customers are paying the bill.
• Don't be afraid to cut them off if they don't pay their invoices, as it's not worth risking your entire business on a single customer.
  
• Outsource your receivables to have industry experts collect on your accounts. Make sure the money keeps flowing in!
• Secure invoice factoring or payroll funding so that you can get the cash up front and not have the cash flow worry.
• Do business with credit-worthy customers. It doesn't matter how great the profit margin is for you if the customer doesn't pay for your services!
• Maintain open communication with your customers after the sale. Not only does this help secure repeat business, but it also allows for open dialog regarding invoice disputes and payment inquiries without coming off as demanding.

Read more about Suze's thoughts on her website, www.suzeorman.com, or on Oprah's website.