Not just the ones that have built up during the unprecedented previous 18 months but also previous arrears that might include PAYE, VAT or corporation tax.
We’ve collected seven simple strategies that implemented individually or collectively could help firms reduce their debt burden, bring in more money during this crucial period and help the business be ready to burst into 2022 firing on all cylinders.
A lot of us hear from people at this time of year that we haven’t heard from in a long while.
Usually it’s nice to catch up but if you’ve been avoiding your creditors then it could be even more important to remake their acquaintance - especially as restrictions on creditors’ recovery actions including winding up petitions have already loosened and are due to be lifted entirely at the end of March.
As well as being polite, it’s also prudent to keep your creditors informed if there’s going to be a delay in making or keeping up with repayments.
Many are running their own business and understand the essential ebbs and flows and will be more liable to be understanding if they are given prior notice.
If the issues causing payment delay are longer term then they may be willing to discuss a payment plan or other relief - but only if you keep to the arrangement and keep them in the loop.
Knowing the ins and outs of your own business is essential to being an effective owner or director but sometimes it can be possible to be too close to be entirely objective.
Occasionally it can be best to take a step back, or even up and look at the problem and the business itself from far outside.
Often called a “10,000 foot” view, it forces the owner to look at the business holistically and give an honest appraisal of its strengths and weaknesses as an outsider would.
They should also take the same approach with finances, to dispassionately look at where the money is going and coming from and where immediate efficiencies and savings can be made.
Money can leave a business in a lot of ways but if one issue is constantly costing a business and it doesn’t need to then this could be a prime candidate for an immediate saving. For instance, if a business incurs fines for unpaid invoices - the finance department could be tasked with making sure this doesn’t happen again resulting in an instant saving.
Applied company-wide, this approach could reap rewards quicker than expected.
A small but not insignificant factor is always trying to remain positive, especially in public and around colleagues and staff.
Managers who project gloom and negativity or publicly complain will signal to their staff and others that they are starting at a disadvantage and don’t have the energy and vision to overcome their issues - even if their strategies and plans are sound.
Being outwardly calm and confident is infectious and can not only raise energy, mood and performance in others but yourself too.
There are three reliable ways to increase the cash flow of a business, any of which can produce extra income that can be the difference between making that bounce back loan repayment or not.
Increasing productivity is the first method.
Discovering new ways to generate revenue or become more efficient and less wasteful is always worth doing.
The next method is to open a dialogue with your vendors and suppliers and see if you can renegotiate for better terms. Even if they won’t alter any agreements, you’ve lost nothing by asking and if they do then you automatically generate better savings.
The final method is another deceptively simple one but could add up to a big win. Keep a close eye on stock levels and usage.
Storing items for a longer period of time than necessary is less efficient all round than just-in-time deliveries. You might be able to work with your suppliers to see if they offer alternative options including consignment inventory or return of unsold goods.
An effective budget is like a computer program - it works or it doesn’t. There are no grey areas or “it sort of works” - the figures are either accurate or they aren’t.
And if they aren’t then it could be a recipe for trouble.
The finances of a business and its cash flow need to be as precise as possible and if agreed in advance stick to as far as practicable.
An accountant or dedicated in-house staff will be able to keep track of the incomings and outgoings and most modern accounting software packages will be able to handle the requirements but it should also be reviewed fairly regularly to see what savings can be made.
Being paid late can be an unfortunate fact of business life and can be damaging for your company if you are relying on the payment.
One little known but very useful measure is that you can claim interest on any late payments at the Bank of England base rate plus 8%. This interest is also calculated on a daily basis for every day that payment remains outstanding.
The capability and intention to reclaim late payments has to be set out within your terms and conditions and even if you don’t intend on using the capability, it could be useful in deterring any businesses who were considering delaying any payments.
Having the legal right to reclaim is a useful insurance policy to make sure that your business will have some income coming in.
A business can be broken down into a sum of its parts. And if those parts could be sold if they are surplus to requirements, obsolete or even quite valuable by themselves then this could benefit your business by making that sale.
If the problems are deeper rooted then more drastic measures might be called for so plant or even unused or undeveloped land could be put on the market to help raise vital funding.
This can also include any under utilised assets including older product lines or stock too.
It’s to make sure you take advantage of our free initial consultation for any business owner or director.
We’ll go through any concerns or financial issues you’re having with your business and help you understand the options you’ve got to improve - probably more than you think you’ll have!
Make an appointment today and you can be more confident that your firm will start 2022 in the best possible shape.