The vast majority of manufacturing companies are classified as small businesses. Like all small businesses, they are particularly vulnerable in the event of a poor financial decision. A recent article from Thomasnet offers some tips for how manufacturers can mitigate financial risk. Author Zachary Smith examines three areas:
Contracts – Strong contracts protect all parties involved, while weak contracts can expose your business to risk. Be sure to always insist upon having a contract and strive to negotiate the best possible terms for your organization.
Payment Terms – Be wary about extending payment terms. In some situations, your clients may run into tough times and ask for an extension. While it sometimes makes sense to grant this, be careful that you only do so for loyal customers and that you do not allow them to take advantage of you.
Caution During Booms – Even when business is good, it is important to remain cautious. Make sure that any big purchases are truly necessary. If you don’t maintain your savings balance, a boom can quickly become a bust.
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