ARE YOU IN CONTROL OF THE FINANCIAL FUTURE OF YOUR BUSINESS?

The events over recent weeks have provided major challenges for all of us and highlighted the need for business owners to have a real understanding of the financial position of our businesses: cashflow, debtors, breakdown of costs and funding availability. When a major event such as Covid-19 happens, national governments tend to intervene; i.e. the UK Government’s introduction of the business interruption loan in the recent Budget, but even in a more stable environment businesses can find themselves with cashflow problems and need external assistance.

HOW HAVE WE HELPED CLIENTS?

A client called upon us in late December, having realised they did not have sufficient funds to meet a large tax bill due at the end of January – for a partnership the time gap between earning profits and paying tax can be quite considerable and having enjoyed a period of rising profits until 18 months previously, profits and the firm’s cash position had deteriorated. We worked with the company partners to understand the current state of the business, to produce a credible 12 month forecast, including cost reductions. On presentation to the firm’s bankers, funds were provided, alongside a capital contribution from the partners, to meet the impending tax bill and establish a working capital facility. The business could move forward with confidence. As with many of our engagements we continued to work with the business for a further two years as their part-time Finance Director. We took on much of the “financial wellbeing” workload from the business owners/partners allowing them to focus on the business growth and clients

After starting work with another business involved in the provision of staff on a daily basis to external clients; they paid staff monthly but only invoiced clients at month-end on completion of timesheets. We worked with the company’s bankers to put in place a business loan to fund the capital expenditure required for improved technology as well as an invoice discounting facility. This allowed

the client to draw down money against the monthly invoices sent to clients in order to meet its payroll commitments. We oversaw the due diligence process carried out by the bank for both lines of funding which expedited the process. Without high quality, relevant financial information being available to the business, this would have been a significant challenge.

Over the last 16 years we’ve worked with most of the main business lenders and brokers when identifying the right solution for our clients. Helping the business owners compile the information needed to secure new funding and more importantly ensuring that an effective set of financial reports are in place that not only identify the status of the business, but where it is going and what potential funding requirements exist. We’re great believers in looking forward with our clients – financial information needs to accurately show:

  1. Financial history (regular management profit and loss accounts with comparisons and explanations of variances and annual accounts;
  2. Where the business is now (balance sheet);
  3. Where the business is going (regular cashflow forecasts, budget/forecastfor both profit & loss and balance sheet).

This is where a good Finance Director can help business owners in really understanding the financial drivers of their business and to take informed decisions about the future of their business, which in this “climate” is key.

For an informal, no-obligation chat feel free to call or email Michael.