A company can leak out unnecessary cash-flow in a multitude of ways: how you deal with your suppliers and what you know about them can surprisingly make a big difference in the great scheme of things.
Sound and Safe Suppliers
‘You can’t choose your family, but you can choose your friends’. A more appropriate business maxim would be ‘You can’t choose your family, but you can choose your suppliers’. All new suppliers to the business should be examined in detail, to ensure that they are technically sound and have the experience and reputation to deliver on their goods or services. A supplier should also be financially stable and have a reliable payment history with their other creditors.
Companies House is an excellent place to start investigating potential suppliers. A database of two million limited companies in England, Wales, Northern Ireland and Scotland, it contains business documents that are up to date and is also an affordable way to ensure that the right supplier is selected. For £4 per month, the database of 260 million documents dating back 10 years is available here at the click of a mouse. There is also a free database that contains information about the company, such as the date of incorporation, insolvency history and previous business names. You can also source companies house information for free using sites such as Duedil.com
A credit check can also be an excellent way of getting an up close look at a supplier. Ask for references from previous creditors and follow up on them. Also, when you get a credit check you should always bear in mind that this information can be up to six months old. If the company is a part of a subsidiary, then consider asking the holding company for a formal guarantee.
Combining this process with a careful planning of the office and the workflow, checking up on competitors using Companies House are two ways that a business can avoid bleeding out money. So take control with these ongoing and vigilant processes.