Having the flexibility to adapt isn’t a top priority for many businesses ─ especially when times are good. Continuous expansion and progress are the usual measures of success, and they are more obtainable when the economy is humming along.
However, when businesses experience a serious downturn ─ companies must take a hard look at how they operate and determine what, if anything, they can do to weather the storm. The firms that successfully come out on the other side of the downturn will be those that have the ability to be flexible and resilient.
If your company is feeling some financial strain right now, here are four concrete ways to inject greater flexibility and resiliency into your organization so you can withstand the environment and emerge from it even stronger.
1. Assess Your Customers’ Financial Health
In the B2B world, many customers are asking their suppliers to extend due dates. Managing these requests can be challenging. While you want to be reasonable with your customers, you must balance that with very real concern regarding when and if you’ll receive payment.
Xactus offers Business Activity Monitoring. This tool allows you to monitor key customer metrics for changes to financial health, credit scores and public record filings. You can also set up alerts so you can better assist your customers with their evolving needs.
2. Thoroughly Vet New Suppliers
Many industries’ supply chains were disrupted during the pandemic, which left companies struggling to find replacement suppliers. It is oftentimes difficult to identify reliable suppliers, but it’s even more so in the midst of a global health and economic crisis.
Carefully scrutinizing new suppliers is a best practice that can ease this challenge. Xactus offers a risk assessment program that analyzes numerous financial and legal components including:
- OFAC sanctions list
- Financial stability
When a business is trying to stay on top of fulfilling orders, thoroughly vetting suppliers is often side-lined. And as a result, bigger problems arise down the line. Consider this: If you partner with a supplier that is deeply in debt, they could file for bankruptcy just after you pay them for an order ─ one you would likely never receive. Or, if a supplier suddenly cancels their insurance coverage, it could mean they are struggling financially. Staying on top of this information will enable you to proactively deal with suppliers and prevent unwelcome surprises.
3. Exhibit Flexibility when Dealing with Customers
Customer relationships should never be taken for granted, even when they are strained due to late payments. While being stricter with customers is tempting, keep in mind that cycles won’t last forever. Companies will remember who was flexible about due dates, payments and terms – and who wasn’t. If you can treat customers well while they are struggling, they won’t forget about you once a crisis is behind them.
4. Identify Better Ways to Determine Creditworthiness
Many businesses depend on a company’s credit information to determine its reliability as a buyer. But there are other tools out there that can give you a more comprehensive view a prospect’s creditworthiness and determine what kind of terms to offer them.
To be more responsive and confident in the terms you extend, you must base your credit policies on the current state of the prospective customer’s finances. To do this effectively, you must use the most accurate and reliable data available.
Unlike other companies that offer self-reported data, Xactus offers Business and Business Owner credit reports and credit scores that are built with data, making them inherently more reliable. We also offer Intelliscore Plus from Experian which uses three analytic approaches to provide credit risk management insights for small businesses:
- Business data
- Business and consumer data on the owner/guarantor
- Consumer-data-only model for new enterprises with no business or credit histories
We even offer DecisionIQSM, an end-to-end application that allows you to customize and fully automate the credit decisioning process.
In this rapidly changing environment, being flexible is critically important so you can alter course quickly if and when your prospects’and customers’ financials change for better or for worse. That flexibility will produce a resiliency that will help you emerge a stronger business in the months and years to come.