We start 2019 with fresh eyes on the year ahead and planning what we want to achieve, both personally and in business. With Brexit looming heavily and uncertainty on the horizon, there is a big possibility of those new year goals being disrupted. It’s important to look ahead and plan for the numerous possibilities that face the UK and there are improvements and processes that can put in place now to help businesses generate more cashflow.
This is important for both small and large businesses and taking control of your payments to debtors and creditors can make all the difference. The government is vowing to step up their efforts and take control of late payments to small businesses and want them paid within five days… and why not? The small businesses out there are our next PLCs.
Most large businesses have their own accounts packages that have set payment terms to pay their suppliers. It’s virtually impossible for small businesses to negotiate better terms and they normally have to work with a portal to load the invoice – causing extra administration. It’s not unusual for large companies to request a reduction in the invoice value if the supplier wants it paid in under 14 days, further squeezing margins.
Large businesses will always have the ability to review their creditors and debtors to keep their cash flowing. At Moneypower we see a large number of businesses paying their smaller creditors within five days, which is great for their suppliers when most businesses offer 30 payment terms. If a larger supplier offers payment terms you could pay on these terms, and not earlier, to help manage your cashflow.
In today’s finance world we have access to finance packages such as flexible overdrafts, selective invoice finance, invoice discounting or factoring products to help bridge the gap between supplying products or services and getting paid for them. These products have their advantages and generate working capital within hours for a growing business, and normally with little security required from the finance provider. However, they come at a cost and as a business grows, so will the cost of the finance product.
Moneypower specialises in helping businesses review their debtors and creditors, along with processes and procedures to come up with a plan to improve cashflow and working capital. We support businesses through the process by engaging with employees and help them make the necessary changes. Training of employees is one of the biggest requirements that needs addressing from the FD down to the finance assistants who are making the payments. With our consultancy service there is no need for extra finance products and businesses can expect up to 250% ROI.
Moneypower International is a management consultancy specialising in helping clients to increase cash generation on a permanent and sustainable basis by focusing on working capital optimisation.
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