The New Year is a great opportunity to stop, think and set new goals for your business. Each year comes with opportunities and brings with it challenges down the road to business success. Financial challenges are some of the most arduous ones business owners have to deal with. The loss of a big client or a slowdown in the economy can significantly slow down cashflow and in some cases drive some companies out of business.
A New Year can also bring new employment opportunities for your staff, seeking their next step up on the career ladder. A lack of staff resource, especially in the finance department, can also lead to further challenges; for instance a loss of specialist skills, incomplete projects, client disappointment, the inability to deal with accountant/auditor timetables, and overloading other members of staff.
It can therefore be wise to consider the option of hiring specialist expertise, even for a short time, to help maintain commercial & financial stability, to fill the gap left by the absent member of staff, and to help tackle these business challenges. To help demonstrate the benefit of hiring an external resource, here are four challenges our EFM finance experts can help your business overcome in the New Year.
Your businesses cashflow depends on a predictable stream of revenue and costs, which should be continuously forecast 13 weeks ahead so there are no surprises and swift action can be taken for potential problems. If your businesses cashflow is suffering because of late customer payments, you need to focus credit control and management actively to get customers to pay on time as well as quickly limiting credit against those who present a bad credit risk.
By hiring a financial specialist to assess your company’s cashflow, they will be able to detect the route cause of the financial discrepancies and strategically plan ways to remedy the issue, patch up any cash leaks and ensure a steady and improved stream of cash flows evenly into the company.
Late Payment of Invoices
If you are consistently late making due payments, it’s important to identify why this is happening in the first place. As the business owner, it’s important to ensure that a consistent payment cycle has been established, as this gives suppliers confidence in extending your credit. But if the problem lies with your company’s cashflow, you may come to realise that you don’t have the available cash to pay off your due payments. The earlier you can forecast this type of problem, the more chance you have of agreeing extended terms with suppliers, or just deferring unnecessary expenditure to a later date.
With the right financial expertise in your company, not only would you have a more experienced individual taking over the responsibility, but you would also have a fresh set of eyes assessing your financial records and giving you clear instructions on what to do differently in the future. A new process can also be implemented throughout the company to ensure efficient and automated payment processing and recording is put in place.
Business owners can be poor at recording financial transactions as this is not what they got into business to do! As they’re not financial specialists, they consider book-keeping to be a rather unsatisfying and monotonous task, which can lead to the undisciplined approach of not completing the task properly or inaccurately. A solution is to find someone in your team to take up this responsibility. However, it’s important not to overload your team or pass this work to someone who is equally unskilled.
Hiring a part time book-keeper is often all you need and can help to benefit your company in more ways than one. A bookkeeper will record the financial transactions and bring the books to the trial balance stage. Financial transactions may include purchases, sales, receipts and payments. When starting up a business, an experienced book-keeper should be on your priority list of early hiring’s. Book-keepers get to know your business as they work closely with your team and are therefore a useful source of information regarding business systems and processes.
Inadequate Working Capital
Companies that struggle financially to make ends meet on a monthly basis are a lot like employees; they live life hand to mouth, and are always waiting for that next big client to pay up. Business owners may have overdraft arrangements with their bank that they can apply to pay for staff wages or other expense payments. However, business owners must tread carefully around this process. It’s important to have at least three to six months of finance headroom available to give the business owner breathing space to focus on generating new business opportunities, increasing their customer network and developing their product & service offering.
Be wise and make the right decision by hiring a finance professional to control, assess and track your accounts to stay ahead of the game, and arrange funding lines relevant to your business needs. With the right expertise in place, you can avoid the risk of inadequate or wrong working capital and work together to strategically figure out a way to manage the growing pains of paying costs, often before you are paid. In addition, if you are a start-up that is still not making a profit, a good finance person can also ensure you have adequate long term financial backing to continue operating normally.
If you’re interested in finding out how our part-time, nationwide team of finance professionals can help to support your business in 2019, get in touch today! Contact our central team via email or call 01582 516300.