Credit control is an important part of running any business effectively, but for small-business owners it can have an even greater significance.
When you rely on a regular income to cover your outgoings, overheads and employee wages, any delay in payments from clients can have a severe impact on your company cash flow.
This has been particularly evident in the past few years, as the recession has gripped several industries more tightly than the rest - and high-profile insolvencies have hit the headlines.
2011: Companies up against the wallWhile the current turbulence hit its peak in 2009, that doesn't mean it's plain sailing for companies from now on. In 2011, liquidations crept up again and, apart from 2009, are still at their highest since the recession of the early 1990s.
Nearly 17,000 company liquidations were recorded by the Insolvency Service in England and Wales in 2011, an overall increase of 5.1% year on year.
Almost 5,000 of these were compulsory liquidations, where a creditor has taken the drastic action of placing a debtor into liquidation in an effort to finally get paid. In many of these cases, early debt recovery action by creditors may have been more cost-effective, allowing the creditors to receive payment without forcing their debtor out of business.
On top of these 17,000 liquidations, nearly 5,000 'other'
corporate insolvencies contributed to a 1.3% increase in receivership, administrations and voluntary arrangements in 2011.
2012: Trying to turn the tide
Credit control is never more important than when other sources of funding dry up. The current economic climate has made it difficult to find business loans and commercial mortgages, making your invoices a crucial tool in keeping your company's cash flow looking healthy.
However, figures from the insurance provider More Than's business arm show that many small-business owners are having trouble keeping on top of their credit.
More than a third of owners surveyed by the firm said they have cut their own income in order to avoid making redundancies among their workforce - a total of 35% of respondents in the past five years.
One in six say the pay cut could last indefinitely, and three-fifths have already had a reduced income for over a year.
But for one in ten of those surveyed, the situation is even more severe - far from simply cutting their own salary, they have actually re-mortgaged their homes in order to put funds into their business.
"It shows real compassion on their part that they're prepared to sacrifice personal gains for the sake of their staff," says More Than's managing director, Janet Connor.
2013: Keeping on top of things?
With corporate insolvencies up for the past five years, and no signs of them dropping again just yet, how can you keep a handle on your finances?
For the smallest companies - contractors, freelancers and micro-businesses - Solo, the free online accounting package from Crunch, is one option.
The software aims to speed up bookkeeping and allow the country's smallest companies to keep a close eye on their tax liabilities - hopefully avoiding any nasty shocks following the end of the tax year.
"It's Crunch's mission to help the self-employed and small-business community by continually improving our cost-effective accountancy services. We're taking that one step further by offering our powerful software for free," says company founder and managing director Darren Fell.
If your major concern isn't your end-of-year tax liability, but your month-to-month cash flow, our credit control and debt collection services can help to make sure your clients and customers pay you on time.
Image by flickr user Images Of Money licensed under CC BY 2.0