Take Control Of Your Business Cashflow In 2010 Article

	1888 Articles Home \| Business Articles	Business RSS
Take control of your business cashflow in 2010

As UK businesses continue to wait for a clear indication as to which direction the recession might take over the next 12 months, access to business finance and credit remains a significant challenge.

Author: Barry Calvo

Article Tools:

In their most recent survey, the British Chambers of Commerce reported that over 30 per cent of businesses had experienced difficulty when trying to obtain finance over the last three months. This is a 10 per cent increase when the same question was asked just five months earlier in June.

According to other recent figures from the Office for National Statistics, investment back into businesses fell by 3 per cent in the third quarter, compared to the previous three months. This represents a decrease of £885 million from the second quarter. Investment now stands at over 21 per cent below last year’s level.

Finance provider Syscap report that some 90 per cent of small businesses also believe that loan arrangement fees are excessive, while 75 per cent feel that the lending margins on loans are too high.

So it all still feels quite gloomy. But if you are a business determined to secure your financial future in 2010 and beyond, there are some immediate options for you to consider which will afford you better control and protection over your cash flow, depending on your situation and financial know-how.

Do It Yourself - Get on top of your book keeping and accounts
This sounds really obvious, but the lack of visibility and understanding of cashflow through your business can lead to a swift downfall in organisations of all shapes and sizes.

Get to grips with budgets and forecasts and be sure you understand them. Make sure you invoice accurately and understand your client’s payment cycles, checking their payment and credit history if you can. Have your own procedure for following up late payment and bad debtors and ensure all your terms & conditions are clear and signed off before you commence work. If finance isn’t a strong area for you or you are time poor, you can get help with this by hiring an external book keeper or similar. This route is a good option for smaller or micro businesses with relatively low number of overheads, personnel and suppliers to deal with.

Get a third party to deal with payments and debtors
On the subject of outsourcing, you could consider invoice factoring or invoice discounting. Many companies now use such services as it allows them to turn outstanding invoices into immediate cash. By factoring your invoices you can raise up to 90% of their value and have the money directly into your bank account as quickly as within 24 hours.

Invoice factoring usually involves the factoring company taking control of your sales ledger and credit control and even following up unpaid invoice and bad debtors. Invoice discounting works on the same principle, except you retain control of invoicing and following up payment, so this aspect of your cash flow remains confidential and isn’t revealed to your clients.

Releasing cash this way allows you to keep on top of cash flow and payments, thus helping to retain a secure credit rating. It also provides you with the means to continue to invest in your company and continue growth. Compared to bank overdrafts and loans, factoring is also competitively priced and accessible. Good factoring firms may also provide financial advice and possibly access to lending, so is a good option for medium to large sized organisations, especially if you need to make regular payments to staff and suppliers.

About Author

The author used to work for a factoring company specialised in invoice factoring and debt management.

Article Source: http://www.1888articles.com/author-barry-calvo-27551.html

Take control of your business cashflow in 2010