Many small and medium-sized enterprises (SMEs) will have experienced some form of financial strain over the course of the past 12 months and, it is unfortunately the case that issues with cash flow could continue to prevail for some in the weeks and months ahead.
Now seems like a good opportunity to revisit some useful strategies for protecting against financial disruption, overcoming cash flow issues and, ultimately, giving your business the best chance of ‘recovery’.
Consider the prevalence of late payments
We’ve discussed late payments as an issue affecting SME’s a number of times and, as you might imagine, the onset of an unexpected global pandemic has exacerbated the frequency of this problematic practice. Late payment makes it difficult for SMEs to grow, compete and innovate and, simultaneously, they often lack the resources – specifically time – to pursue debtors.
With the administration of the Prompt Payment Code (PPC) recently made the responsibility of the Small Business Commissioner, businesses struggling with late payment should find support easier to secure.
That being said, there are still steps that affected organisations can take to avoid poor payment practice as either the perpetrator or the victim; such as utilising payment technology, discussing payment terms before a contract commences and being open and honest with suppliers and customers when issues arise, to ensure they can be resolved efficiently.
Identifying the right financial support
There are a number of different financial support measures currently running, in response to COVID-19, that eligible business owners and taxpayers can access. The key word there, being ‘eligible’ – with each measure having different conditions that must be met, it can be difficult to discern exactly what you may be entitled to.
With knowledge of your circumstances, our experts can help you to identify which financial support is available to you and how this might best be utilised to overcome any difficulties you are experiencing.
Understand how your finances behave
Understanding how your finances behave is key to navigating potential disruption to your cash flow. In particular, are there any cycles or patterns to money coming and expenditure that you can identify and use to your advantage in respect of forward planning – perhaps, dependent on the time of year, or led by your credit control processes.
Balance the ‘what-if’s’ with the here and now
On the topic of planning, whilst thinking about ‘what-if’ scenarios can be useful and help you to recognise the potential for financial disruption that might have otherwise been overlooked, there is such a thing as dwelling too much on things that could happen but haven’t yet.
There’s a lot to be said for finding a balance between planning for as many eventualities as possible and planning for those that are particularly likely or otherwise a dead cert.
To really protect your business, you need to be ‘present’ and paying attention to the here and now, as much as you need to give the future some forethought.
How can George Hay help?
As a business owner you will know that balancing the books and ensuring that your cash flow remains healthy, is critical to ensuring your business not only survives but, in the long term, thrives.
For help and support with cash flow, payroll, management accounts, credit control and business financing, please contact our expert team today.
You can also read more about managing your cash flow during the pandemic, here.