There are many ways of improving Cash Flow for a business and we have given you a few ideas to do just that.

To help you see how these ideas can help your business it would be worth while doing some cash flow projections. The Cash Forecaster can be used as a management tool to identify critical costs areas of the business and how these impact the future cash-health of the business.

For example – you might like to experiment with introducing Factoring or Invoice discounting to improve the flow of cash from your customers whilst you are in expansion mode – Just because a business is making a profit it might still fail if the profits are not turned into cash – Remember ‘Cash is King’ in business!

You may have heard of the term ‘Over Trading’ – Over trading is where a business is making good sales and turnover but that it is not able to keep up with the payments to suppliers simply because their customers are late in paying the company. The obvious way to correct this is to make sure that your payment terms to your suppliers are more generous than those given to your customers. Alternatively, the introduction of Factoring will help.

Having a Cash Flow Management tool to hand will help you to explore the effect these ideas will have on your business:

1. Increase sales and in particular those involving cash payment or payment by either standing order or direct debit.
2. Reduce your direct and indirect costs and overhead expenses.
3. Consider increasing your prices and especially to your slow payers – see Bowraven’s “Profit Increase Software“
4. Review the payment performances of customers and be more selective when granting credit – start using a credit report company to check the credit worthiness of potential customers.
5. Consider up-front deposits or multiple stage payments – approach a loan company to advance the money to you and offer credit terms to customers.
6. Reduce the amount of credit given to customers and change your payments terms – i.e. reduce the time allow for customers to pay.
7. Introduce factoring or invoice discounting to accelerate receipts from sales.
8. Make sure that your sales invoices are raised as soon as the work has been completed.
9. Offer early payment discounts and consider introducing late payment charges or fees.
10. Generate regular reports on receivable ratios and aging or your customer balances and use more pro-active collection techniques – involve your sales team and make sure that any commissions are only paid where customers pay the company.
11. Consider the 80/20 rule with regards to your customer list and product lines – make sure you know where your profits are coming from. You might well find that 80% of your profits are coming from 20% of your customers or 80% of your profits from 20% of your product lines – if either of these are true consider not dealing with the 80% of customers and cancel the 80% of non profitable product lines. Be careful when do this, as it might be that certain products are reliant on others, in which case they may be ‘Loss-Leaders’.
12. Take a look at how you pay your suppliers – ask for extended credit terms. Get new quotes from other suppliers and re-negotiate prices of supplies.
13. Try to reduce your stock levels (inventory levels) and improve control over work-in-progress – make sure that you are billing work in progress on a regular basis and keep write-offs under review.
14. Sell off or return obsolete/excess stock (inventory).
15. Defer or re-stage all capital expenditure.

Planning these changes and which ones work best for your business can be done using our tried and tested Cash Forecaster.

Post by Russell Bowyer

10 ways to save money in your business and make your business a lean mean fighting machine!

In an economic slow-down it is time to cut costs!

When things are going well and saving money is not at the top of the agenda we can all let things slip and not pay close attention to cut costs. With the credit crunch still biting the majority of businesses still I though it would be good to help focus on where money can be saved.

1. Bank charges

If you have been with your bank for a number of years and many people tend to be very loyal to their banks, for some reason. Always remember this, if times get tough, the bank will be the first one to kick you out on the street, as their decision is based purely on a commercial basis without emotion. So it is always good to have a look at the competition and see what deals you can do with other banks and the bank charges you pay or save.

2. Bank loans

You might well have banking finance in the company be it a general loan or overdraft or it might be in the form of a mortgage on a business property. It is always worth while checking to see if you can get a better rate, especially right now with bank base rates being so low. The rate your are already on might not take account of the full rates reduction, so by moving lender you might get a better deal or even a very good fixed-rate deal.

3. Company credit cards

If your business uses credit cards then these will have an associated cost, be it an annual fee or the fee they charged if you use it abroad on business. Check with other banks how much they charge for a similar service, as you might be able to save some money where the cards are used in a significant way.

4. Pay-down your mortgage

Where interest rates have dropped so much your mortgage payments will have dropped by a large percentage. However, if you can afford it, why not keep your mortgage payments at the level they were before so that the capital element of the mortgage gets paid down faster.

In the long-run this will significantly shorten the length of your mortgage and reduce the amount of interest you pay over its term. Also, at a point when rates start to rise again, the amount you owe will be that much lower so the repayments at that point will be lower.

5. Review your supply chain

You might have ordered your stationery from a certain supplier for some time now and it might be that there are other companies out there that offer a better deal. There will be companies eager to get your business and might be willing to give you good account discounts to get your business.

Equally, your existing supplier might well give you a better discount if you ask them and more likely if they know they might loose your account. This saving tip applies to all of your supplies and where you are a manufacturing type business and you purchase goods to sell, then if you can source cheaper suppliers for your business, you will improve your gross profit margins.

6. Cash takings

If you are a cash business you might already try to minimise the amount of the cash you bank and instead use it to pay suppliers, employees and so on. Banks charge you significantly to bank cash so if you can limit how much you pay in this will reduce these costs. You might also want to look at other ways of banking your cash, for example the UK’s Post Office has always been a cheaper solution for banking cash, so it might pay to look around for banks that charge lower “Cash-Banking” rates.

7. Save money on your fuel bills

Even during this economic slow-down the cost of energy has remained relatively high so it would pay you to search around for a better deal. You can normally search online for Energy Comparison Sites so that you can cut your fuel bill on gas and electric. Sometimes by combining the two into one bill and by paying by direct debit will save money – so take time to speak to different companies.

8. Cut your phone bills

For some businesses the phone bill is one of the high costs and by switching supplier can reduce this cost. Look at getting a deal whereby the landlines you use are linked in some way to your company mobile phones so that calls between the office and the mobiles can be free with certain deals on the market. Consider incentivising your employees to switch to your own service provider where call-charges are cheaper when made between the same supplier and the business makes a significant number of calls to employee mobiles.

9. Accountants fees

Accounting and professional fees can be a significant cost to the business and it is always worthwhile reviewing not only the cost of this service, but also whether the accountant you use is saving you money. If you have a good accountant and tax adviser, they should be able to come up with tax-saving tips for your business and if you change the new person might see something that your old accountant has missed.

Also, try looking for an accountant that this prepared to offer a fixed fee – you end up paying too much to accountants or solicitors that charge by the hour, as you are paying for their inefficiencies if you pay them by the hour!

10. Company car policy

Review your company car policy and how often you change your vehicles and for what level of car you buy as a replacement. Also, consider the fuel type your company vehicles use – there are obviously petrol versus diesel and now you have the new types including electric cars and a combination fuel type car.

These are just 10 ways to save money in your business, but if you start to think this way then I am sure that you might well come up with your own ideas to help reduce costs in these difficult times.

Key Performance Indicators (KPI) are financial and non-financial measures used to help a business define and evaluate how successful it is and are used to monitor how the organisation is doing.

Another term for KPIs is Key Success Indicators (KSI) and any business that uses KPIs is one that certainly has an advantage over businesses that don’t. What you measure you can manage and each business needs to choose which KPIs are key to the performance of the business and those performance indicators that will have a major impact on the business if they are improved upon.

So what exactly is a KPI – the best way to answer this is by way of an example:

Client Conversion KPI

A KPI that is key to any business is it’s conversion of enquiries into actual clients, so for example if you are currently getting say 30 enquiries per month and you convert 10 of those enquiries into clients, then your KPI is 10 divided by 30, which equals 33.33%.

By having this percentage you now have a target to beat, but more importantly, by acknowledging your conversion rate as being 33.33% you can take steps to look at why it is this low and take action to make improvements.

A first step might be to make contact with the 20 out of 30 enquirers that do not become clients and ask them why this is. By asking your potential clients you will find out what it is you can do to improve upon this KPI. By taking action you will get more clients from those that enquire about your products or services and improve your Client Conversion KPI.

Average Revenue per Client KPI

Another example and also one that is both relevant and key to all businesses is the Average Revenue per Client KPI. Let us assume that you presently have an annual turnover of £550,000 and on average you had say 2,500 clients in the same year. Your Average Client Sale is £550,000 divided by 2,500, which equals £220, which represents your Average Revenue Per Customer KPI.

As with the first example, once you know what the average spend of your clients is you are able to address ways in which you can increase their spend, thereby Increase Business Profits.

There are KPI’s that are non-revenue related, for example:

Employee Retention KPI

If a business has a high employee-turnover this will be very costly to the organisation. Therefore, if you can keep your employees for longer periods and thereby reduced employee-turnover you will drive down costs and save time, by avoiding unnecessary interview and training time involved in replacing every new employee.

To get your Employee Retention KPI you take the number of employees that you lost over a given period (lets say you lost 5 employees over a 12-month period) and divide this by your total employees over the same period (let’s say that this was 20) therefore, your KPI in this instance would be 25%.

Once you have your Employee Retention KPI you can take the necessary steps to change this and make improvements and one such step would be to carry out Employee Exit Interviews and ask them for reasons why they are leaving your organisation. By performing Employee Exit Interviews you will discover a lot about why your staff are leaving you and then take steps to reduce this KPI and save the company money in the process.

So to begin on the road of business success you need to start Developing key performance indicators.

Most business owners think that the only way to make more profit is to increase client numbers!

Well let me explain to you that this is not always the case and in a well thought out change you can actually achieve higher profits in your business with fewer clients. With fewer clients you can make your business more efficient too and if you go through this process you can then re-think about expanding your business in a different way. Look at this as resetting the foundation of your business in order to rebuild and grow it in the right direction. As with anything, a solid foundation is essential for a strong and stable structure.

A few years back in one of my businesses I made the decision to triple (yes that’s right triple) my prices on one of my services. At the same time I modified and improved the service for the clients. I took a gamble on the basis that not all of my clients using this service would leave. I calculated that if I lost around 20-30% of these clients I would be left with a lower number of clients paying me more money and have a business being more profitable.

Let me tell you that this gambled paid off, yes of course some clients complained bitterly and some clients left, but not as many as you would think nor as many as I thought would leave, in fact around 10% of clients left in the end. What is interesting to note is that in those clients that decided to leave were the ones that were the less profitable ones and the ones that gave us more hassle.

The great thing is, as a result of my actions I was making more money, on this side of my business, for less work and less hassle! So a win, win situation!

A lower number of clients require less work and also less administration and therefore less staff to deal with the underlying process. The impact of this is that you make more money from the product or service line itself and the business has lower overheads, leading to yet more increases in profits.

If you decide to do something like this in your business, and especially in the present economic climate, be careful and think it through very carefully. In my business I had a few service lines so this helped to spread the risk. I don’t think I would have done this to all my services at once, as this would quite clearly be too risky. So if your business has more than one product or service line, and you want to try something like this, I suggest that you try it with one product or service at a time.

Also, if you do try this out, make sure that you are giving a very good customer service and that the product or service you are selling is an excellent product or service. I would also add that where there is high competition in the market you serve then this is less likely to work and would present a higher risk.

As noted above, once you have trimmed your business and made it more efficient and profitable, you can then look at attracting more clients and growing it by attracting more clients of the type you want.

I have secured the UK licence for a product that has a 10 year track record in the USA. The product improves fuel economy and cuts engine emissions as a result. This has a potential market of £300M and the possibility of turning over £25M within 3 to 5 years. I have scope to extend into Europe, which has a potential market of £3.5bn.

As the economy slows and companies look around at ways to reduce costs and as pressure to meet carbon reduction targets bite, this product can help hundreds of those companies and hundreds of councils in the UK to face these challenges – creating a sustained and growing cashflow.

I have secured £140K start up funds from the USA and need to match this here in the UK. Scottish Enterprise have indicated that they see this as a potential “Account Managed” business – turnover to exceed £5M turnover within 3 years.

Small businesses and radio journalists currently using the product in East Central Scotland all report cost savings and lower engine emissions. The product was used successfully in the engines of Indy racing cars last year in the Firestone Indy Lights Series. A technical report is currently being compiled on this and will be available soon.

Loal government in the UK, for example, could save in excess of £100M and cut harmful emissions by more than 300,000 tons a year – creating a turnover of around £30M to the business. Add a range of major international transport operators right down to small businesses and this can deliver a very positive return to any investor.

Contact me at info@fuelsaver.bhen.co.uk for more information.

This is an opportunity to help develop a very valuable and profitable business that is projected to turnover £7M (Year 1), £19.6M (Yr2) and £23.6M (Yr3).

I have put an e-book together as a guide on how to put empty space to good use and make a lot of money. I even got rid of adsense to make more space. You can get my e-book from www.lulu.com/content/3356024

The World economies are in real difficulty with the banking sector having the worst time in years or probably the worst it has ever had! Oil prices at record highs putting pressure on households and businesses alike. Food prices are also on the rise which will impact households and how much the have to spend on luxuries.

It was reassuring to see the banks (The Woolich and the Halifax I think) start reducing interest rates, which will help to ease things a bit – but I see the Bank of England is split on where to take interest rates next time! However, we have just borrowed from Barlcays to buy a property to house our staff and they have charged us 2.5% over base! We were very disappointed in Barclays over this, as they offered the same loan only 6 months ago at 1.5% over base!

It would be interesting to see other company owners comments on what they are doing to beat the pressures they are facing right now. A friend of mine runs a highfi shop and he commented that last week was the slowest week they have ever had in their long history!

We have began to re-direct our advertising into other areas and really begun to focus our attention on our convertion rates of enquiries to customers and which adverts are working best for us. When times are tough you need to start changing what you do – I run a care business caring for people in their own homes and I originally thought that we would not be affected by the tightening economy, but I am not so sure now.

We need to start looking closely at our prices and have just introduced another cheaper service providing a 5-day week service instead of the full 7-day week service. This has shaved £150 per week off our price and we have already got a new client as a result! I guess £500 sounds a lot cheaper than £650!

So I would say that we are beginning to be more creative and getting tougher and leaner!

It would be good to hear your comments to this on what other business owners are doing and maybe we can transfer ideas on this forum!

Our business website is live in care specialists!

Keep cash flow to an optimum by observing the following suggested methods:

– Keep your payroll bill down to an absolute minimum – however, always pay good money to good employees or they will walk!
– Try to avoid signing long-term rental agreements and if fancy offices are not necessary don’t bother with upmarket office space, especially if your customers rarely visit your business.
– Don’t overpay yourself – you only need to take out what is enough to feed yourself.
– Keep a close eye on staff travel and entertainment and avoid issuing staff with company credit cards and mobile phones!
– Fancy office furniture hurts the bank balance and is not necessary unless you are in the type of business that needs to impress clients. Secondhand or liquidation stock furniture is the best option and will save you a small fortune!
– Keep an eye on your supplier costs and where possible play one against the other to keep them keen and your profits high.
– Always call your customers that owe you money and make sure you keep a close eye on “Debtor Days” (Debtors days is the time your customers take to pay you from the invoice date)
– Pay your suppliers on time, but if you are going to be late paying call the supplier concerned and always, always stick to any date agreed between you.
– Don’t waste electricity by leaving computers and printers on over night – this is also good for the environment too.
– If you are out for a business meal, if the other side offers to pay, never pay!
– Get your invoices out on time and on a regular basis – the sooner you invoice the sooner you get the money!
– Create good systems in your business that will help to save time and will help you to keep employees to a minimum.
– Delegate jobs to the lowest possible denominator in the business – having good systems will help with this process.

For help with preparing a cash flow forecast click this link “cash flow forecasting made easy”

If you join this forum you will receive a 10% discount on all the products on the bowraven.com website.

Once you have joined – go to your site admin Dashboard and there will be a link – click on this 10% discount link and all the products added to your basket will be discounted by 10%!

Products include:

Millioniare book
Arbitrage betting system
Cash flow forecasting made easy
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We look forward to your joining us and to reading your posts and comments!

I had register my company for TPS – the telephone preference service not realising that I also need to register for FPS – the fax preference service. We kept receiving those unwanted faxes that use paper, but especially expensive inkjet cartridges!!

It was only after speaking with one of the companies that had sent us a fax and they suggested registering and when I said we were already registered, they apologised and suggested we contact the FPS to see what had gone wrong. It was at this point when I went to their website that we were not registered with both – there are probably so many businesses still out there that might not realise these can be stopped quite easily!

The FPS/TPS website has the folowing info:

Welcome to FPS Online

Under Government legislation introduced on 1 May 1999 it is unlawful to send an individual an unsolicited sales and marketing fax without prior permission. Businesses have the opportunity to register fax numbers on which they do not wish to receive direct marketing faxes.

You can do this by registering with the Fax Preference Service. Although this Service is primarily aimed at businesses, as individuals have protection under the legislation, individuals may also register their fax numbers if they wish.

Before you apply however, you should be aware that registration may preclude you or your business from receiving information of value – thereby cutting you off from worthwhile business opportunities.

Welcome to the Telephone Preference Service (TPS)

The Telephone Preference Service (TPS) is the central opt out register on which you can record your preference not to receive unsolicited sales and marketing telephone calls to your home or mobile telephone numbers. It is a legal requirement that all organisations (including charities, voluntary organisations and political parties) do not make such calls to numbers registered on the TPS unless they have your consent to do so.

Organisations with which you have an ongoing relationship, for example those who regard you as a customer, (or in the case of charities – a donor) may well gather your consent during the early stages of your relationship with them and will therefore be entitled to call you even if your number is registered on TPS, unless you have previously told them specifically that you object to them calling you for marketing purposes.

The TPS can accept the registration of mobile telephone numbers, however it is important to note that this will prevent the receipt of marketing voice calls but not SMS (text) messages. If you wish to stop receiving SMS marketing messages, please send an ‘opt-out’ request to the company involved.

As TPS registration only prevents marketing calls, organisations will still be able to call you for the purposes of genuine market research.

Before you register with TPS…

It is worth reflecting on the fact that registering may well prevent you from receiving relevant and worthwhile information. For instance charities find telemarketing to be an economical way to raise awareness and much needed support.

To register with both of these services click here