Managing cash flow - what the latest reports tell us
 

Managing cash flow - what the latest reports tell us

March 30, 2017

Luisa Grey, a director at Eazipay Ltd, one of the UK’s largest Direct Debit processing companies, knows a thing or two about managing cash flow. Here she highlights what the most recent reports tell us about managing cash flow and how you can avoid the traps.

A raft of new reports on SMEs and cash flow last month has underlined the unnecessary time and money being spent on managing company cash flow.

While technology has enabled businesses to simplify many aspects of their day-to-day operations, daily cash flow management is still a challenge for UK SMEs. A recent survey found that SMEs are collectively losing over £8.72 billion every year as a result of the time taken to complete weekly finance related tasks.

Another study revealed that more than six out of 10 business owners regularly, or occasionally, draw upon personal finances like a personal credit card to support their business.

And with 15 per cent of SME start-ups also saying that they found this to be an issue, what can we do to avoid unnecessary cash flow volatility and business risks?

It's critical to make sure, that alongside your profits forecast, you also have a cash flow forecast. Review it regularly to ensure you have the best toolkit to equip your business for managing payments and dealing with the unexpected hurdles that all businesses face from time to time.

Appoint someone to keep an eye on the cash. When the levels fall below a critical amount (which could be anything from £1,000 upwards depending on the size of the firm) they need to let someone in authority know.

Make paying simple for your customers. Cheque writing is tedious for everyone involved. Electronic payments are much quicker and the money will be in your bank account sooner. Customers can also be offered early payment discounts to encourage them to pay within a timeframe which works for you.

Look for and negotiate longer-term deals and business partnerships. Think about differentiating your services from your competitors by offering alternative billing arrangements, including the use of classic retainers and monthly payment schedules, to enhance your competitive edge.

There's nothing like getting all your customers on to Direct Debit to make life easier for everyone and really stabilise your cash flow. Most of the time, automated processes are just better (how much time do you spend chasing invoices?) and can leave you to spend your time more efficiently.

Invest in effective alternative financing solutions such as invoice or supply chain finance. Don’t rely excessively on loans and investments – this will affect your ability to manage cash flow effectively.

Don't be a late payer yourself. Not only will it reflect badly on your company, you could incur unexpected costs and charges. Signing up to the Prompt Payment Code and, where possible, working with other companies that are signatories to the Code is another quick and easy step to take. The Prompt Payment Code sets the gold standard in payment terms and its members have made a commitment to lead the way in payment practices.

Finally, if you are having a cash flow crisis, talk to your bank. They might well be able to help you out with some short-term funding and give you sound advice on how to avoid a similar crisis in the future.

It’s true that if a company has poor cash flow for a sustained period, it is at grave risk of going under, no matter how profitable it looks on paper. This is because although it may have a substantial order book, if it's not getting the money in from its customers fast enough to pay for the employees and goods and services needed to fulfil those orders, it’s unlikely to survive for long. However, taking the steps above, you can start making sure you cut down on the stress and set your business up for continued success.

For further press information, please contact:
Damion Clark at Real PR (Consultants) LLP. Tel: 01353 667934 or 07789 911314 Email: damion@realpublicrelations.com

Eazipay Limited are authorised and regulated by the Financial Conduct Authority, number 615816 under the Payment Services Regulations 2009 for the provision of payment services. www.fca.org.uk
The Financial Ombudsman Service (FOS) is an agency for arbitrating on unresolved complaints between regulated firms and their clients. Full details of the FOS can be found on its website at www.financial-ombudsman.org.uk

© eazipay 2015 | sitemap

site by prussian blue + tIMC

cookie policy

our website uses cookies and similar technologies to help make this website better Read More

happy to accept?

 

 

Cookie Policy

Our Cookies Policy explains what cookies are, how we use cookies, how third-parties we may partner with may use cookies on the Service, your choices regarding cookies and further

What are cookies

Cookies are small pieces of text sent by your web browser by a website you visit. A cookie file is stored in your web browser and allows the Service or a third-party to recognize you and make your next visit easier and the Service more useful to you.

How Eazipay Ltd uses cookies

When you use and access the Service, we may place a number of cookies files in your web browser.

We use cookies for the following purposes: to enable certain functions of the Service, to provide analytics, to store your preferences, to enable advertisements delivery, including behavioural advertising.

We use both session and persistent cookies on the Service and we use different types of cookies to run the Service:
- Essential cookies. We may use essential cookies to authenticate users and prevent fraudulent use of user accounts.

For the full disclosure section, including all types of cookies, please click here.

Third-party cookies

In addition to our own cookies, we may also use various third-parties cookies to report usage statistics of the Service, deliver advertisements on and through the Service, and so on.

What are your choices regarding cookies

If you'd like to delete cookies or instruct your web browser to delete or refuse cookies, please visit the help pages of your web browser.

Please note, however, that if you delete cookies or refuse to accept them, you might not be able to use all of the features we offer, you may not be able to store your preferences, and some of our pages might not display properly.

More information about cookies

If you would like more information regarding Cookies please visit the below site:
ICO (Information Commissioner’s Office) - https://ico.org.uk/for-the-public/online/cookies/