Every business does its best to optimise its efficiency and effectiveness but some go a little further to maximise their earning potential. Sometimes it’s the little extra edge or initiative that can make a critical difference, help them bring more money or clients in or reduce a high debt burden.
Here are some easy ways a business can improve their functionality and help them achieve even more success.
Keep talking to creditors
A lot of people steer clear of their creditors and those they owe money too. It’s an understandable instinct but not necessarily a beneficial one. It’s good to keep in touch anyway but now all restrictions on creditors actions have finally been removed and statutory demands and winding up petitions can be brought for debts over £750 – it’s also prudent to keep them informed.
Especially if there’s a chance that there could be a delay in keeping up with repayments or allowing arrears to build up.
A lot of creditors are also running their own businesses and thoroughly understand the occasional difficulties in keeping all the spinning plates in the air at once. They may also be more willing to discuss payment plans or revised schedules but realistically only if they are kept informed well in advance and not after a payment has been missed.
Look at the big view
Sometimes it can be too easy for business owners to get too caught up and obsessed with the minutiae of their daily tasks and literally be too close to take an objective view.
The best strategy can be to deliberately take a step outside of the business and look at it from an outsiders point of view. They can imagine they are a prospective buyer and can force themselves to honestly appraise the strengths, weaknesses, opportunities and threats that they would see.
This fresh take could unlock new opportunities and chances to strengthen the business where it needs to be. This approach also applies to the finances of a business and if anything is even more important. If they can see efficiencies that can be made then this will have the most immediate effect on the balance sheet and can bring in benefits quicker than any other initiative.
Keep tight control of cash flows
Most directors understand how important cash flow is but it needs to be underlined even more strongly in these increasingly tough times. There are three main methods that can have an immediate effect on cash flow depending on how they are implemented.
The first way is by increasing productivity. By finding new ways of generating revenue or cutting down on waste or being more efficient it will give a better return for a minimum of initial outlay.
Another way is to carefully monitor stock. How much is kept and used at any one time? Keeping items around when they are not needed immediately is inefficient and wastes space and time. Some suppliers can offer better deals for customers who purchase just-in-time so it would be worthwhile exploring other incentives.
Better terms might be negotiable depending on what’s on offer but without asking the question you’ll never find out.
Keep financial discipline
An accurate budget should be the keystone and lodestar of a business to guide them at all times based on their initial plans.
Yes, plans can change but then the budget should be too – it will still provide a useful benchmark to plan and measure future success and trends against. If spending gets away from what’s budgeted for then a business could be in trouble a lot quicker than it could anticipate.
Fortunately modern accounting software and a switched on financial team will be able to spot any potential spikes in real time and alert directors and managers so they will have ample time to react and come up with new tactics to meet the reality.
Also, a budget should not be set in stone – if the facts change and more money is coming in than initially budgeted for then it can be updated to take account of this and invest in new efficiencies to increase profitability quickly.
Reclaim late payment interest
One legal way of increasing funds is little known but very effective. Late payments, while being a fact of life for a business owner, can also be damaging if the business has budgeted to receive them on time.
If they are late, then there is a way companies can claim interest back to make up for it at the Bank of England base rate plus 8% with interest calculated on a daily basis for the time the payment is outstanding.
A sensible company will have this clause in their terms and conditions and will set out its intention and capability to reclaim the interest on late payments even if they don’t ever intend or need to use them. This is a legal right to reclaim what is lawfully owned and could provide some needed income if required.
Get advice – quickly
Another trait that separates effective managers and directors is being able to take action quickly when it’s required. If a business is in financial difficulty then getting some advice at the earliest opportunity will give them the best possible chance of finding a solution and acting upon it.
Business Rescue Expert offers a free virtual consultation for any business owner or director who wants one and once fully across the unique issues facing a company can advise on what steps can be taken to make these problems go away.