5 Ways to Improve Your Cashflow

Matt White of Calverton Factors gives the following great advice on cash flow to business owners:

Was the dip in GDP growth in the last quarter of 2010 just a consequence of the coldest December in 100 years or does it signal something more serious? Whatever the overlying figures, the real issue for small businesses are sales (or lack of them) and cashflow. Lack of sales may be a temporary blip but the impact on the business can be ruinous as it is often not so easy to cut costs to the same degree. Many businesses have not been able to build up sufficient reserves to overcome short term problems and if this is the case then cashflow management becomes even more important. However there are a number of steps that can be taken in order to improve cashflow and to assist businesses through these difficult times:

1. Financial Information: The benefits of timely and accurate management accounts are more prevalent than ever. A cashflow forecast is essential and this should be your starting point for negotiations with your bank.

2. Your Bank: Visit you bank manager now. You should take with you up to date accounts, forecasts (particularly a cashflow forecast) and aged debtor and creditor lists. Your aim should be to confirm your facilities for the next 12 months.

3. Credit: Begin to think of your cashflow as the most valuable part of your business. Every time you grant credit terms to your customers it is costing you cashflow (as well as real money). Every time you negotiate extended credit terms with your suppliers it improves your cashflow (and saves you money).

For new customers ask them to pay on invoice, or in 14 days, before you go to 30 days – that’s from invoice date NOT end of month following. To help customers pay quickly offer them discounts for early settlement and consider penalties for late payment.

4. Credit Control: A good credit controller is worth their weight in gold and, more than anything else, good credit control is about consistency. Credit control should work to a system of statements, letters, telephone calls and, only if very necessary, legal action. Implement a system of consistent and regular contact with your customer – remember most people are happy to pay; you just need to make sure you are first on the list.

5. Invoice Factoring: Invoice Factoring provides early payment against the value of a business’s invoices. It also provides immediate access to a highly experienced and capable credit control team. As well as providing upfront cash against your invoices, the Factoring Company will credit check customers, chase for payment and if required insure the customers against non-payment.

In the current economic environment the sources of funding for working capital have shrunk. The high street banks are being more stringent on their overdraft lending and with property prices declining it is getting harder to remortgage to raise capital. The one valuable asset that remains on a company’s balance sheet is the sales ledger and this makes Invoice Finance a highly attractive means of maintaining cashflow and protecting the business from the ravages of the recession.

Calverton Factors is an established and independent invoice finance company based in Milton Keynes. If you are looking for finance facilities from £25,000 to £500,000 then please feel free to contact Mathew White on 07748 631630 or at mattwhite@calvertonfactors.co.uk.

Learn how to raise your game by visiting my website.

Looking for investment?

If you're one of the businesses looking for investment during 2011 then you are much more likely to succeed if you are well-prepared. Whatever the scale of your business, this means having a clearly-articulated business strategy and a credible plan to deliver it.

Your business strategy should set out a defensible market positioning: a compelling proposition in an attractuve niche. Your management team needs to have a proven track record in the industry and be capable of organising the resources, human and otherwise, to deliver the plan. The plan needs to explain how you will achieve the forecast top line (marketing and sales), the costs involved (people and facilities) and the risks and how you will mitigate them. It also, of course, needs to set out the financials - profit, loss and cash flow. These need to match the forecast sales and costs. A sophisticated set of numbers will show base, best and worst-case scenarios matching the risks and opportunities identified.

Finally the plan needs to show what is in it for the lender or investor. For the latter you will need to have a clear understanding of the value of your business before you start negotiating to sell some of it..

Learn how to develop a plan for your business by at my website.

Systemise your business to grow it

One of the key changes you need to make to grow your business beyond you is to systemise it.

This will not only make it easier to find, recruit and manage staff it will make your business more valuable. m The value of a business depends on its growth prospects, profitability, cash conversion and the degree to which that future cash flow is at risk

One of the main risks for small businesses is their reliance upon key personnel, particularly the owner, who know and do things that no-one else knows or can do.  This risk is present even if you have no plans to sell the business. If you the owner or one of your key staff are unable to work for an extended period what happens to your business?

Systemisation is the process by which the processes of the business are documented and standardised and reliance on any one individual is removed.  This process also makes a business scalable; the processes can be replicated, additional staff can be selected and trained and the business can grow beyond the constraints of any one person

Find out more at this seminar "The Owners' Trap", which will explain how this and other changes should be implemented to help you to take your business on to the next level..

Learn how to raise your game by visiting my website.

Why job descriptions help your business grow

Job descriptions are an essential part of co-ordinating and motivating employees.  Without a job description an employee does not have a clear understanding of what they are supposed to achieve and how their performance is measured – and you have no way to hold them accountable.

The process of creating and reviewing job descriptions is an opportunity to discuss and clarify the role – to reinforce two-way communication.  This is part of leadership, and part of building a true business - one that is bigger than you aqnd not constrained by the hours you are able to work.


Find out more at this seminar "The Owners' Trap", which will explain how this and other changes should be implemented to help you to take your business on to the next level..

Learn how to raise your game by visiting my website.

Do incentivisation schemes work?

The underlying assumption is that rewarding employees for achievement (usually financially) will encourage them to work harder and achieve more in pursuit of those rewards.  This view is not borne out by academic research but in practice bonus schemes are widely used.  A carefully-designed bonus scheme when implemented on top of good employee practices in a well-run business is a useful management tool – but it is not a substitute for these things.

When you're struggling to grow your business beyond you; when you are trying to get the right people doing the right things so that the business is no longer reliant upon you - an incentivisation scheme might have a role to play.
Find out more at this seminar "The Owners' Trap", which will explain how incentivisation should be implemented - as well as the other steps you need to take to take your business on to the next level..

Learn how to raise your game by visiting my website.