• Build your early warning system to see financial shortfalls, months in advance, when you still have time to act.
• Make better investment decisions, taking on new employees or technology etc by seeing how they affect your bank balance in 3-6 or even 12-months’ time.
• Take the weight off your shoulders and sleep better at night by taking control of your finances.
How to get money into your bank account quicker
This alone can transform your bank balance!
How to hold on to your money for longer
Simple suggestions to improve your credit terms without annoying your suppliers
How to keep more of what you earn: Profit & Tax strategies
How to maximise your margins
How to raise and protect your money
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Emma and Cian
A true life (almost) story of how scenario planning can save your business
The get paid quicker checklist
1) Are you measuring how long it takes clients, on average, to pay you? Is it anyone’s responsibility?Are you waiting longer than 30-days to get paid? Think how getting that money in your bank in half that time would affect your bank balance?
2) Consider more advantageous milestone payments. Look at your terms and conditions: When do you ask for payments to be made during your work? Is a large percentage of the total value payable on completion? Could you ask for more or even 100% upfront, before you start? Change your default. Explain to clients clearly and confidently: “This is how we work, 100% upfront.” Only negotiate if / when you have to.
3) Work In Progress (WIP), could you streamline your processes to speed up the time from starting to finishing projects? If payments are structured at stages of your work, this will help you get paid quicker.
4) Review debtor (Customer) collection terms and systems. 5) Agree with a portion of your debtors (Customers) to set them up on Direct Debit using GoCardless or similar systems on Xero or other similar s/w.
6) Insert a “Pay by Card” link on your invoices and statements sent to debtors (Customers). 7) Offer incentives like small percentage discounts for forward payment of debts by your debtors (Customers) with large outstanding balances.
How to hold onto your money longer
8) Review each supplier’s payment terms: how long do they give you to pay?
9) Pick up the phone and talk to each of them about extending your payment terms. Suggest doubling the time they give you. If that doesn’t work compromise by asking to split the difference.
10) If you need to, let them know you are reviewing suppliers and this is a key part of the criteria.
11) If they’re not flexible or irreplaceable, contact their competitors. Suppliers often offer better terms to new customers over established ones.
How to keep more of the money you earn longer: Profit and Tax strategies
12) Are you paying suppliers more than you need to? Do you negotiate discounts? If you’ve had no success, ask for discounts by: volume (buy more in bulk or what else can they supplier you with to entice the discount), or by your commitment (longer term contract)
13) When did you last review your suppliers? Are your suppliers taking your business for granted? They'll often offer better discounts for new business – check the market out.
14) Know your walk-away price: Before you agree a contract or take on a new customer, decide the absolute minimum price /profit you’ll work for. Make sure, whatever the temptation, you stick to it.
15) Do you offer a deluxe, with bells on, premium service or product? What could you add to your standard products or services, that costs you little by has a high perceived value to your customers?How much more do you think they would pay? Research shows 15% of buyers choose a premium-priced offer.
16) When did you last put your prices up and by how much? We all think clients won’t pay more but until you ask for more you’ll never know.Test this out on a small number of clients or service/product lines
17) Is it possible that you are losing money on some clients, contracts products or services? Do you have the data, within reach, to know how profitable or not, each client or product/service line is? If not what data do you need to find out? If you can uncover the precise profit margins you can focus more on the type of clients and services that will grow your bank balance.
18) Even without precise financial breakdowns, you probably have a good idea of those clients that demand more than they are paying for and sap your energy. Is it time to ditch them? Do you know the financial impact?If not what data do you need to find out?
Tax Saving Suggestions
19) If your business is a limited company it makes sense to take out your money in the most tax-efficient way out of the business by a combination of salary and dividends.
20) Another tax-efficient way of taking money out of the business is paying your spouse a tax-efficient salary.
21) There are opportunities to save tax by investing in a personal pension.If you are not doing this already it's worth looking into.
22) There are certain tax reliefs on travel and subsistence which a company director of a limited company can take advantage of.
How to free and protect your money
23) Review your Stock levelsHave you been holding particular items for too long? Do you have boxes of old stock taking up space? If they’re selling too slowly, how can you get them out and raise cash?
24) Avoid bad debts Are you vulnerable to clients who don’t or can’t pay?Do you have a red flag warning system to pick off high-risk clients, before they cause you harm?If not, what should you be looking out for?Are you credit checking potential clients?
Emma and Cian
The true life (almost) story of how to spot cashflow problems, the money running out in your bank account, in time to save your business.
A thriving business
To celebrate ABC Limited’s 4th anniversary, Emma and Cian, the founders, take their small team out for the night. Over cocktails, Emma explains their ambitious growth plans for the year ahead.
“2019 has been such a breakthrough year for us. So much has changed over the last 12 months. We've got customers on long term contracts and at last our marketing is paying off and getting us in front of some great potential buyers. It feels like we've turned a corner and can start to scale the business.” As they lock the office doors for the Christmas break Emma says:
“Can you feel the buzz in the office? Everyone is so excited about the future. It really feels we are the brink of something special.”
Cian agrees as they hug and head off in their different directions home.