Tel: + 353 (0) 1 535 9592


Tel: + 353 (0) 1 535 9592


Take the worry and uncertainty out of your cash flow
25 practical tips to maximise your bank balance and future proof your business

• 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.

Index

1

How to get money into your bank account quicker

This alone can transform your bank balance!

2

How to hold on to your money for longer

Simple suggestions to improve your credit terms without annoying your suppliers

3

How to keep more of what you earn: Profit & Tax strategies

How to maximise your margins

4

How to raise and protect your money

Get access to all available features and start attracting clients straight away.

5

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.  

June 2021
“Can you believe it's just 18-months since we were in that cocktail bar so excited about the future?”  
The last year had been particularly difficult for Cian. He had a young family to support, and they had struggled through COVID financially and emotionally.  
Emma tried to cheer him up: “Well it can't go on forever. We just have to get through the next few months until things start to get back to normal.” 
She knew that whenever lockdown ended, and the economy did pick up they would never recapture how they felt that evening. Their longest serving and closest team member, Hannah had left the business just a month ago and their most supportive customer had entered receivership. The firm’s once healthy finances had been hammered, despite the grants and government aid. 

November 2021
Emma was surprised she was the first to arrive in the pub, even though she was a respectable 15-minutes late. Before she could get served, Cian tapped her on the shoulder:  
“Grab that table in the corner, I'll get the drinks in.” 
Within a couple of minutes John had joined them. They had met John at university and been close ever since. Even though the subjects they studied were as different as could be, Cian and Emma, fashion design and John accountancy. 
A couple of drinks in, the conversation turned to the business.  
Cian could feel the emotion rising in him as he talked through their struggles since COVID struck. Ever the optimist, Emma jumped in excitedly: 
“We’re having our third meeting with this outfit called Excelsior in a couple of weeks. They’ve a small shop in Dublin but are opening a massive flagship store in London, in the Summer.”  
Cian’s eyes lit up:  
“They love our designs and have picked out a €250,000 order for the London shop! Nothing’s confirmed yet, but we’ve met their senior team and they know they need to confirm by February for us to meet the order.”  
The warehouse can’t cope with that capacity, but we’ve found a brilliant new one, just a stone’s throw from the office. And you won’t believe the price, it’s over twice the size and even though warehousing rents are going through the roof, this one’s only 50% more! 
Cian jumped in:  
“What do you think John, should we go for it?” 
John started laughing delighted to see his friends back to their normal selves after the miserable Zoom calls of the last year:  
“Well, how on earth do I know without looking at your cashflow forecasts. Send them over to me and I’ll tell you what I think.” 
“You should know us well enough by now John. As if we’d have cashflow forecasts! I can send you over last year’s accounts if I can find them. Will that be enough for you? 
John shook his head:  
“How the pair of you built this business when you totally ignore the finances is beyond me. Bring everything you have over to the flat. We’ll sit down with the accounts, you’re still on Xero aren’t you, and run through your expectations for the year ahead. Then, between us we can decide if the new warehouse seems like a good idea.” 
“I’ll bring the wine,” said Emma.  
“You’d better bring a few bottles, it’s going to be a long night,” said John smiling, head in his hands.  

John’s front room, two weeks later  
“Right, now we’ve cracked it,” said John. 
“All your expenses are laid out and we’ve factored in all the sales you expect for the next business year.”  
The good:
“Thanks John. You’ve given us both piece of mind now. It’s a no brainer. It will be a bit tight, but we can afford the new warehouse. I’ll call them in the morning and get the paperwork started. You’re up for that, aren’t you Cian?” Emma turned to Cian.  
“Would you slow down.” John interrupted. 
“Have you thought about how you’d get by if the Excelsior contract didn’t come through? I know they’ve said all the right things when you met them on Monday, but there’s no signed agreement is there? There’s no contract yet? And they’ve told you, no confirmation for a couple of months.” 
“How would you pay for that warehouse then? And heaven forbid, what if a couple of these established customers don’t come through with the orders you’re expecting? Then what? Forget the new warehouse, you won’t be able to buy the stock for your old one!”   
For the first time during the night, there was total silence. 
“Listen,” John continued:  
“You know your business better than I do.  
Things might go exactly how you planned out. But it does seem to me, you've painted a picture of the best possible scenario for the year ahead.” 
Somewhere here a sentence has to be added that Director Pension Contributions were projected to be cut in May 2022 to keep Cashflow Positive. 
{Image 1} 
The bad:
“How about we prepare another forecast assuming the Excelsior contract falls through, or even if it is confirmed, a couple of existing customers fall by the wayside?” 
Cian and Emma nodded and John opened started tapping on his laptop again.  
Scenario 2 was identical to the first cash flow forecast, except the turnover was down €250,000.  
Instantly they could see the bank balance would dry up by March 2022 leaving them unable to make their March 2022 rent payment and March 2022 Payroll. 
{Image 2} 
The mood in John’s front room was rapidly changing:   
“You’re scaring us now John. Our accountant never told us any of this. We only met with him a couple of months ago. He agreed that we were back on our feet now. All was looking good!” 
John smiled:  
“Cheer up. It’s like I said. It might all go to plan. But isn’t it better to be prepared? We’ve time now to plan how you’ll get through it, not panic in a couple of months when the pressure’s really on you both.”   
Emma threw her hands in the air:  
“We’ve already cut costs to the bone, how could we get through that?  
{Image 3} 
The ugly:
John shifted in his chair, awkwardly:  
“You know I love your optimism and I love being around you both because it's contagious. But what if the new contract falls through and you lose some of the other orders you're taking for granted? You might not even lose them, what if they just get pushed back a few months?” 
John picked up the wine bottle and filled all three glasses: “Come on, it’ll do us no harm to look at the numbers.” 
The third and final cash flow scenario revised the turnover down €500,000 from their original expectations. This time the money runs out in January! 
{Image 4} 
Seeing the colour drain from Cian and Emma’s faces, John continued:  
“However grim this looks now, I’m telling you, I’m sure you can even get through this worst-case scenario. We’ve time on our side.”  
Emma leapt to her feet and clapped her hands:  
“Right, we know how bad things could get. What are we going to do about it?”  
John and Emma turned to Cian as he picked up the corkscrew:  
“Well, we’re going to need at least another bottle, aren’t we?  
February 2022
It was just after 4 on the Tuesday afternoon, before Friday’s contract signing meeting with Excelsior, when the phone rang. 
Cian could see from the look on Emma’s face that something serious was wrong. 
“But we were ready to sign the agreement.” 
 “Ok, yea, I understand.”  
“I mean, is, is this definite?”   
“Are you sure? Well, it’s just a bombshell for us. I don’t know what to say.” 
The call continued. Emma nodded her head a few times:  
“No. Thank you. I do appreciate it. We’ll see you Friday as planned then.” 
Cian fell into the chair:  
“It’s gone, hasn’t it? They’re not signing the contract, are they?” 
Emma explained that the lease for Excelsior’s new London store had fallen through. At the last minute they were outbid! They were really sorry and still in shock themselves, but Cian was right, the contract would not be signed on Friday.  
But at least they had a second site lined up and they were close to signing the lease. The problem is they will have to wait until it’s available.  
Listen Cian, said Emma. 
“It's not the end of the world. Thank God John could see this coming. We just need to contact the bank and tell them we do need to take up that loan now.”   
The Crunch meeting 
The Friday meeting with Excelsior’s management team was difficult, but under the circumstances, positive.  
Excelsior’s founder and MD, Clíodhna, had a soft spot for Emma and Cian. She knew how hard their changing timelines would affect them. And her chief buyer had told her often enough that ABC’s style and designs were “central and irreplaceable’ to the London’s store’s range.  
So, when Cian explained they’re back up plan, “just in case the order fell through,” and told her how advanced negotiations were with a retailer with boutiques in Bayswater and the West End. 
Clíodhna knew she had to do whatever she could, to keep their range exclusive in London.     
She immediately offered them an order, for the same value, just delayed for the new opening date. Clíodhna promised to have the agreement drafted within a week for their solicitors to review and they could sign as soon as they liked. 
March 2022 
Coming just a fortnight after Excelsior’s news, the letter arriving on Emma’s desk from their first ever client, Origin Designs, felt like a hammer blow. Their relationship with ‘Origin’ had never been close, their buyer was difficult and hard to get hold of. But their orders were substantial and consistent from their very first meeting. 
The template wording was cold and short. The provisional order was cancelled as a new supplier had been appointed.  
Cian felt terrible. He had chased the signed contract a couple of times, but he knew he had let it slide. Never for a moment did he think the order would fall through. Afterall, as he explained to Emma, ‘Origin’ was so dis-organised he always had to chase the paperwork, but it always arrived in the end. 
The lost revenue amounted to €250,000. Exactly the amount John had factored into the worst case cashflow scenario. It was no co-incidence. John had accounted for losing their largest client. 
{Image 5} 
Emma pulled up the company’s bank balance online. They had been waiting for ‘Origin’s’ payment to arrive. It wasn’t unusual for their payment to clear before the signed contract.  
“Thank God we spent that night with John before Christmas. There’s absolutely no doubt we’d be sunk if we hadn’t. We’d never have gone all out to get new work in.  
“It certainly made the Excelsior meeting easier, knowing they weren’t holding all the cards. The margins weren’t great with Bayswater Boutiques but after running them through John’s cashflow forecasts I could see how much flexibility we had with the price and how much we needed to bring in.”  
“We just would have had to take out the full €200,000 loan.” 
“And getting that ‘Intention to buy ‘letter from the boutique in Bayswater really strengthened our hand with Excelsior. You were brilliant Cian.”  
“It was a pretty vague intention to buy, to be fair. They knew they’d have to wait a month to hear if we could confirm the order and their new budget was waiting for approval as well!” Said Cian laughing. 
What could have been!   
“Doesn’t it make you wonder how we ran the business before cashflow forecasts?” asked Emma. 
“Ignorance is bliss I suppose.” Said Cian. 
“Tell that to Kevin Morrow.“ said Emma. 
“It’s a long time since I thought about him, Emma. He was some genius, wasn’t he? I always thought he had the golden touch.”  
“Until it all exploded on him.” Said Emma. 
After graduating Emma and Cian had joined a small Dublin fashion company, Urbane Designs, run by Kevin Morrow. In less than 10-years he’d built the turn-over to more than 20m.  
Within a couple of years of joining, the two of them were chosen to open a London office. It was an immediate success and a new contract had been signed with an American retailer that would almost double their turnover, again, in less than a year! 
Then one Monday morning they arrived at their Soho offices to find the locks changed. As Kevin explained to them over a coffee a few months later he was so busy planning and investing in the future he took his eyes off the bank balance. Or as he corrected himself, he just focused on the bank balance. 
He told them, if he’d just had a clearer picture of the money coming in and out of the business over the next quarter, they’d have been fine. But instead, his attention was fixed on the American deal and the bigger picture. 
Then one afternoon, after checking his bank balance, he made a major commitment with an American manufacturer. All it took was the collapse of a decent sized customer co-inside with less than anticipated sales of his Autumn range, and he couldn’t pay the bills! The expansion had left him overextended at the bank and he didn’t have time to find new funding. 
The pair of them thought the world of Kevin. You couldn’t find anyone with a bad word against him. But the collapse of Urbane had cost him so much. He had a fortnight to move out of the big house in Killiney, the kids were pulled out of private school, his family were suffering so badly.   
The most upsetting thing was, as Kevin explained to them, the business was sound. More than that, the future looked amazing. If he’d had time he could of sold some assets got over the hump and soon returned to the highly profitable business he was used to. 
Instead, he lost it all for such, as he put it, “tiny, temporary debts.”    
“If we hadn’t have planned for the worst, we would have lost everything too Emma,” said Cian.  

How scenario planning saved Emma and Cian
As sobering as John’s scenario planning was for Emma and Cian, it saved their business: 
Without forecasting the firm’s future bank balance, based on a positive neutral and disappointing level of orders, Emma and Cian would have taken on the additional expense of a new warehouse. 
Cutting the pension payments from May gave Emma and Cian the scope to make rent, payroll, and VAT payments. 
Without seeing how exposed their finances were, should the Excelsior payment not come through as expected, they would have struggled for time to find and agree finance.  
They also would never have seen how vulnerable they were and wouldn’t have gone all out to find new business.  
The cash flow forecasts allowed them to see exactly how much revenue they needed to find and by when, giving them a degree of control and certainty.  

Tel + 353 (0) 1 535 9592
Connect with Micheál

©Created by Perfect Client

All rights Reserved

Tel + 353 (0) 1 535 9592
Connect with Micheál

©Created by Perfect Client

All rights Reserved