At a time when businesses are experiencing increased finance costs, reduced credit access and delays in customer payments, we have been encouraging clients to revisit their financial planning and to find increased funding from within their own balance sheets.  This includes fixed assets, stock, work-in-progress, debtors and creditors.

Sensible actions and effective management of cash flow can be achieved by review of the following:

• Banking Arrangements – in tougher times for us all, take time to reassess deposit and borrowing rates and cost tariffs.  Banks need to be competitive and, if you know what to ask, you can achieve positive results without damaging your relationship with the bank. 
  
• Employment Costs – employing people is expensive for many reasons and a significant fixed cost for many businesses.  Have a look at productivity and consider alternatives to hourly rates and overtime such as performance related pay and other benefits.  Also consider outsourcing, sub-contracting and shorter term fixed contracts before recruiting additional full time staff. 
  
• Customers – invoice discounting may well improve cash flow especially if debtor days are increasing, however the first action should be to improve communication with your customer to find out what issues they are experiencing and perform credit checks.  You should also enquire into credit insurance on bad debts. 
  
• Suppliers – contact your key suppliers.  They will not want to lose your business.  Take a look at costs and margins.  Contact utility providers regarding alternative tariffs and consider energy efficiency. 
  
• Stock and work-in-progress – as well as reviewing holding periods and system efficiencies, too many businesses retain slow moving stock that is arguably of little or no use to them.  Free up valuable space and generate cash by selling at substantial discounts and go on line to review the increased use of barter sites. 
  
• Asset Finance – carefully consider the many methods of acquiring additional assets and refinance of existing buildings, plant, machinery and equipment.  Remember also to consider alternatives to owning and providing company cars.

This is common sense housekeeping regularly reviewed by successful businesses.  Most businesses, however, focus on the day to day and rarely review issues such as those above.

In difficult economic times at least be satisfied that you are efficient in what you already have so as to give you a competitive advantage. 

It is important, however, that you don’t stop promoting your business.  It is now more than ever that differentiation from your competitors is vital.  Keep yourselves out there and promote your business and its goods or services.  There are many businesses in this region that are well placed to win custom from outside the region as well as from those who have taken their eye off the ball.  It is understandable that as a business owner you want to keep costs under control and this can be done by following some of the steps above but in the long run, steady, cost effective investment in promotion and awareness of what you can offer will increase your bottom line and ensure your business makes it through to the other side!

For further information please look at our website: www.gvt-sheffield.co.uk