Posts tagged ‘Flexibility’

Everyone in business has heard the term “Cash is King” and understands the importance of cash flow, but when in the day to day ‘busy-ness’ of business it is easy to take your ‘eye off the ball’.

So in these difficult times, if you find yourself in a position where cash flow becomes a matter of urgency rather than a procedural chore, what can you do to turn things around?

Here are my top five quick fixes, each one worthy of a post of its own.

1. Debt Collection

Focusing on getting paid for what you have provided is an obvious place to start. 

Don’t allow customers to improve their cash flow at your cost and don’t get lazy when it comes to implementing rigid credit control procedures. Many ledger clerks are instructed by their managers not to issue payment until a debt has been chased both in writing and verbally, so don’t cut corners or get caught off guard. 

If you are uncomfortable with this discipline or you have accepted that this is not your skill set, outsource it.  I recommend Ken Brown from Direct Route for everything from collecting a single difficult debt to completely managing your sales ledger. 

Also, be sure to focus on servicing customers that do stick to your payment terms.  Don’t forget my previous advice about allowing “he who shouts loudest…” to distract you from those that are key to your success.

2. Improve terms and conditions of sale

Meet with each of your valued customers without delay and renegotiate terms.  By prioritising their needs and building confidence in your business relationship, agreements regarding quick payment, or even payment on delivery can be made. 

If need be, offer an early payment discount to encourage quick settlement.  Often the reduction in margin, is substantailly less than the cost of finance such as overdrafts or the deminished goodwill from not meeting debts as they fall due.

Don’t forget that it costs a lot more to attract and service new business than it does to obtain more business from your current clients.


3.  Get your bank manager onside

Having up to date management accounts, a clearly defined business plan that demonstrates that the current difficulties are short term and building an open, honest business relationship with your bank manager will no doubt create flexibility. 

Once they have built confidence in you as a business owner, they will at short notice be able to offer solutions and support.  Involve your accountant in this process.

4.  Manage suppliers

This aspect is often not given enough attention.  In the same way that you manage customers, prioritise, negotiate and treat your suppliers with respect. 

Being honest with them and honouring any payment arrangements you have agreed with them will keep your integrity and prevent suppliers from ‘digging their heels in’.

Also, if you hold stock, review your processes and speak to your suppliers about delivery times etcetera, they may be able to help you to manage a ‘just in time’ system by offering you a priority service. 

5.  Increase profitability

Certainly not the easiest or quickest approach and one where you might want to seek support from your accountant or a business coach.

Looking at overheads is an obvious point, but how about reviewing historic data to identify which products/services in your sales mix generate the biggest contribution and assign time and effort in pushing these.  Perhaps redirect your marketing budget and reward your team for selling these items or finding innovative ways to deliver these at lower costs.

As well as focusing on your most profitable products/services, take time to identify your most profitable clients

Budgeting can take time, but often some ‘quick wins’ can be discovered by carrying out these accounting exercises.  They can also drive long term process and cash flow improvements. 


The information provided in this blog illustrates my opinions and experiences, it does not constitute advice and I do not accept responsibility for any actions taken or refrained from as a result of reading this post.

For more advice on subjects such as this, please ‘join my lists’ for a monthly business support newsletter.

Are you aware that the minimum retirement age is increasing to 55 from 6th April 2010?

This will mean that you will no longer be able to obtain an income or draw tax-free cash from your private pension before your 55th birthday except on the grounds of ill-health.

If you are aged 50 to 54 on 5th April 2010, you need to speak to your IFA as soon as possible to discuss your retirement plan as you will lose access to pension funds until you are 55 if you don’t act before 5th April 2010.  Please give your adviser time to administer your plans, there’s little point in approaching them at the end of March.

You have three options:

  1. Buy an annuity
  2. Transfer to an income drawdown scheme
  3. Do nothing and wait until your 55!

Retirement Road Sign with blue sky and clouds.Did you know that you do not need to physically retire to start taking income from your pension plan?  This means you could take your tax-free cash drawdown and reinvest it while you continue to work, giving you increased flexibility and control over your future.

Obviously taking cash from your fund will reduce its value so you need to talk to an adviser about the effect of this on the long term income you will derive from the plan.


The message here is clear, if you are 50 -54 years old and haven’t spoken to your IFA for some time, now is the time to do.  Don’t procrastinate, it could cost you dearly.


If you don’t have an IFA, I can recommend through personal and client experience, the advice of Chris Langdon at RHG 01438 345734. 

Please bear in mind that while accountants have a good working knowledge of retirement planning, most are not regulated or insured to give advice.  Make sure you are getting good quality advice bespoke to your needs from a professionally qualified  financial adviser.

The information provided in this blog illustrates my opinions and experiences, it does not constitute advice and I do not accept responsibility for any actions taken or refrained from as a result of reading this post.