The Facebook Live for July 2026 provided practical, actionable advice for managing finances during periods of economic uncertainty. The topics covered included aggressive credit control to manage late payments, reviewing and cutting non-essential overheads, renegotiating terms with suppliers, and exploring short-term funding options like overdrafts or business credit cards.
Control What You Can Control
As we all know, some economic factors are outside our control, but our response to the situation is not. The global situation with COVID-19 back in 2020 is a good example. This blog is about proactive steps that can be taken to protect your business during periods of economic uncertainty. We are going to focus on the three Cs: Cash, Costs and Communication.
CASH is King: Protect Your Cashflow
During times of economic uncertainty, everyone will be trying to cut back on the money they spend and delay paying bills as much as they can, to keep the cash in the business as they don’t know what is going to happen, what money they will need or when. You do not want to end up being an informal bank for your customers.
However, as a business owner, you need to put aggressive credit control measures in place. What is credit control? Credit Control is the process of ensuring that customers who owe you money pay on time.
Here are some steps you can take to ensure your business is being paid on time.
- Make sure that your credit control procedures are clear and easy to understand. Did you make your customers aware of your credit control terms before they became a customer? Are they published on your website? Do your invoices show the credit terms on them?
- Invoice your customers immediately and accurately, for any work that you do for them.
- Have clear payment terms in place. Some businesses have different types of credit terms for different types of customers, so make sure your invoices show the correct payment terms for that type of customer. You need to ensure that all customers know what your payment terms are from the start. You might have a policy of invoices due within 14 days, or maybe it’s 28 days.
- Follow up on overdue invoices systematically. Start from the first day they become overdue. You will want to make sure that the process you follow for chasing overdue invoices is clearly outlined in your credit control procedures. For example, with my business, hosting clients are invoiced a month before their hosting expires, with payment due by the date the hosting expires. If they do not pay on time, they are given 7 days’ grace, but after that, a statement reminder is sent every week for 3 weeks, and if payment still doesn’t occur, their hosting account is turned off. The process I follow for my bookkeeping clients is different, as they are a different type of client.
- In your credit control procedures, on the invoices, and in your late payment reminders, mention that you have the right to charge statutory late payment interest. You can decide how you wish to charge for late payments, but by law, in the UK, when there is a Business-to-Business agreement, a business can charge 8% plus the Bank of England base rate. However, you can use a different rate for charging interest, but you would need to make it very clear in your payment terms and credit control procedures what that rate is.
This page on the Government website talks about how to deal with late commercial payments, and what you can legally do in regard to charging interest and recovering your debt.
The Federation of Small Businesses also has a late payments hub with template chasing letters, a late payment interest calculator, and guidance from the Small Business Commissioner.
What about your current pricing? When was the last time you increased your prices? It is a good idea to increase your rates every year due to inflation and other rising costs. During periods of economic downturn, you may see your own business expenses going up, which would mean that you would need to increase your prices to cover those increased costs. If you increase your prices on a regular basis, and in small increments, it won’t come as such a big surprise to your customers.
Costs: Become Leaner and More Efficient
Every business will look at ways they can save money during an economic downturn, and you shouldn’t be afraid to do the same.
The first thing to do is to conduct a full review of your overheads. Overheads are ongoing expenses not directly attributed to creating a product or service, but things that are still needed for running your business. Examples include things like rent, utilities, or even website and email hosting.
Go through your bank statements, credit card statements, and PayPal accounts line by line to see what it is you are actually paying out for. Make notes on a spreadsheet of who you are paying, how much you are paying, and what it is for.
The next step is to categorise all of your outgoings into 3 categories:
Essential – can’t operate without the item
Nice to Have – improves things but isn’t critical to running your business
Non-essential – anything that can be gotten rid of as it will not have an impact on your business
It might surprise you just how many things you are paying for that you don’t even use. Maybe you signed up to do several courses, or you have several apps that you are paying for that all do the same thing, but you had forgotten that you had an app that did that job. Take a close look at every expenditure you have noted down and challenge everything. Are you really using all those software subscriptions you are paying for? Can you get a better deal on your insurance or utilities? Can you renegotiate rent?
Scaling back your expenditure will help with your cash flow at any point in time, but especially when there are tough economic times you are dealing with.
Once you know what is going out, put together a simple cash flow forecast for the next twelve weeks. Money in, money out, week by week. It does not need to be complicated – a spreadsheet is fine. The point is to see a shortfall three or four weeks before it arrives, while you still have time to chase an invoice, delay a purchase or arrange an overdraft, rather than finding out on the day the payment bounces.
Communication: Talk to People
Communicating with your customers and suppliers is key to having any successful business, but there are times when communication becomes even more important.
Talk to your customers and keep them informed about whether you need to increase your prices by explaining why. If all of your business costs are going up, i.e. software fees, then you are going to need to increase your prices to cover those costs. Making sure you give your customers as much notice as possible about price increases, and clearly explaining why they are happening, when they will happen, and by how much, is going to make it easier for your customers to then look at their own costs and plan ahead. Good customers will understand why you are increasing your prices.
It is also worth renegotiating your terms with suppliers before you hit a problem. If you have been a reliable customer for years, say so, and ask what they can do. That might be extending your payment terms from 14 days to 30, moving an annual bill to monthly instalments, asking for a loyalty or volume discount, or agreeing a fixed price for the next twelve months so you are not caught out by mid-year increases. The worst they can say is no, and most suppliers would far rather keep a paying customer on adjusted terms than lose one altogether. Get whatever you agree confirmed in writing.
Don’t be afraid to contact your bank or credit card company, or any lenders you have loans with, to discuss your situation. It is especially important if you are going to need to take out an overdraft, or ask for a longer period of time to pay off a loan. Speaking to them at the earliest opportunity will most often work in your favour. Just make sure that you know what it is you want to ask them for, and have an idea of the amount of payments you can afford, and how much more time you are going to need to make those payments.
Funding: Know Your Short-Term Options
If cash flow is still tight after tightening credit control and cutting costs, there are short-term funding options worth understanding before you need them.
An arranged overdraft is usually the cheapest way to cover a short, predictable gap – but arrange it while things are stable, not when you are already in trouble. A business credit card can smooth timing on smaller purchases and gives you a clear paper trail, but only if you clear the balance each month; otherwise the interest will cost you more than the problem it solved. Invoice finance lets you draw against unpaid invoices, which can help if late payment is your main issue rather than a lack of work. And for larger gaps, a short-term business loan with a fixed repayment schedule is easier to plan around than rolling overdraft use.
Whatever you choose, work out the total cost of the borrowing, not just the monthly payment, and be honest with yourself about how you will repay it. Borrowing to cover a timing gap is sensible; borrowing to prop up a business that is losing money is not.
Having a tight grip on your finances is your best defence in a downturn. If you need help analysing your costs, setting up a robust credit control process, or forecasting your cash flow, I’m here to help. Let’s build a resilience plan for your business. Let’s build a resilience plan for your business. Just contact me if you would like to have a chat.