Avoiding a cash-flow crisis

This post is by Giles Ellis, an experienced business coach and Director at GECA Chartered Accountants. GECA offer Business Planning and other Business Advisory Services.

10 ways to prevent cash flow problems in your business 

Your business doesn’t have to be tiny or struggling to experience cash-flow problems – in fact, periods of rapid growth can often trigger issues with cash liquidity. Left unchecked, cash-flow issues can slow growth and even take your business down.

If you’re having problems with cash flow now – or if you can see them on the horizon – there’s no one way to get your company back in balance. You need to identify what’s causing your cash-flow issues and try a few different strategies to get things back on track.

Here are 10 ways to get started:

1: Cost-cutting measures

Cutting costs is the most obvious way to boost cash flow in your business. And unlike raising revenue, it can have an immediate effect on your income flow. Where to cut costs depends on your business – you might be able to cut unnecessary expenses like business travel or company cars, put a freeze on overtime, or even reduce staff numbers to save on salaries.

2: Raising prices

Raising your prices is another simple way to increase cash flow – and you don’t need to implement a major price hike to make a difference. Even modest price increases can have a significant impact on your profits. If you’re nervous about losing customers through a price rise, consider offering deals on bundled products or services to offset the increases.

3: Check new customers

New customers are great for business – but only if they actually pay their invoices. Avoid issues and ensure cash flow by carrying out credit checks on all new clients. You should get a notification if the business or individual is in the habit of making late payments or defaulting on bills.

4: Tighten payment terms

You don’t have to give your clients months to pay their bills – in fact, a long payment term can be a major factor in cash-flow problems. If your payment term is set at 60 or 90 days, consider cutting it to 30 days to speed up your cash cycle.

5: Reward prompt payment

Prompt payment of invoices keeps cash flowing, so it should be incentivised. Offer a small discount for early payment, to encourage clients to get their invoices in as soon as possible. However, you may not want to offer this option on a permanent basis, as it could impact on your profit margin.

6: Invoice quickly, follow up regularly

You can’t demand prompt payment if you take months to issue an invoice. Keep things rolling by sending invoices as soon as the work is completed or the product is sent, and make sure to follow up on late payments. Every unpaid or late invoice is costing you money in goods and services – and damaging your cash flow.

7: Lease, don’t buy

Buying furniture, IT equipment, cars, property, and anything else you need to run your business is a huge expense. If you’re considering a new purchase, think about leasing instead – that way, you’re only making a small payment every month, which should help improve cash flow. Cancelling a lease is generally easier than on-selling if you need to downsize.

8: Think about invoice financing

A large, outstanding invoice can put a major dent in your cash flow. That’s where invoice financing comes in – some lenders offer quick, short-term loans based on outstanding invoices – ideal if you need instant access to cash. You’ll get up to 85% of the value of the invoice within 24 hours, then get the final 15% once your customer pays the invoice.

9: Look into loans

Short-term loans can help you bridge a cash-flow gap – whether from your usual bank, a non-bank lender, or alternative finance sources like peer-to-peer lending. You could also think about looking for longer-term funding from partners or investors if you’re often running into cash-flow problems.

10: Get help from the experts

Many cash-flow issues can be solved with quick-fix solutions, but if you’re finding yourself short more often than not, it might be time to get expert advice. Working with a finance expert can give you an outside perspective and help you find new ways to generate cash for your business.

You could bring in a business accountant or part-time CFO to help you sort your finances long-term – creating financial forecasts, reviewing your expenses and income, and helping you find innovative ways to boost your cash flow. They can also help with decisions around spending, hiring, and pricing your product or service. It’s about getting an objective outside view of your business – with years of experience behind it.

Read one of our other blogs for further information on how to combat cash flow problems.

Need expert help with your cash flow problems? Get in touch with GECA today.

The post Issues With Cash Flow? Here’s How to Solve Them appeared first on GECA Chartered Accountants.

Lifting your business to the next level

If you’re a small-to-medium business, the thought of hiring a CFO, even part-time, may sound excessive – aren’t they for big corporations? Would you have enough for them to do? 

But if your business is entering a period of rapid growth, a part-time CFO could be exactly what you need. After all, if you’re trying to move up to the next level in business, who better to talk to than someone who’s already been there? 

Having access to an expert with experience in bigger, more established companies can help you make the right decisions and avoid expensive mistakes. They can provide everything from operational support to in-depth strategic analysis and can find new ways to move your business forward.  

Bringing on a CFO part-time means you get access to high-level finance expertise when you need it, without paying an unnecessary full-time salary. 

More than just accounting services 

These days, CFOs offer far more than simple bookkeeping or accounting services. They deliver invaluable strategic analysis. This can have a huge impact on your performance, profitability, and long-term business success. 

When you hire a part-time CFO, the scope of duties will depend on the size of your business, your specific needs, the industry you’re working in, and your overall business strategy. Generally, they will work to shape your company’s finance strategy and provide day-to-day support for your financial operations. 

A CFO should also be able to help with business planning and forecasting, tax planning, risk management, compliance, auditing and reporting, investment, working capital management, and general budgeting. 

As an experienced finance expert, your CFO will act as your company representative and help you communicate and negotiate with lenders, investors, and auditors more effectively. They may work with your board of directors to hammer out financial details. They’ll be in the ideal position to offer advice and guidance around any business decisions – mergers, sales, acquisitions, or any other major changes.

A new perspective 

A good part-time CFO isn’t there to simply tick the finance box and go along with every idea the CEO comes up with. They act as more of a strategic partner to the CEO or business owner, using insight and perspective to identify opportunities and offer solutions. 

When you’re running a business, it’s easy to get bogged down in the day-to-day, so an outside perspective can be incredibly valuable. A good part-time CFO will act as a sounding board for your questions and problems, but should also be able to spot issues, boost efficiency, and identify opportunities that you may not have considered. As money experts, they’re the most likely to notice when your strategy isn’t on a firm financial footing and should be able to help you shift your vision to match your financial reality. 

Even though your part-time CFO wouldn’t be working in your business every day, they should be able to offer their own expert opinions on company decisions. More importantly, they can speak up if they disagree. It’s not about negativity, it’s about challenging assumptions and pushing your business forward. 

Face challenges with a part-time CFO

Growth is positive, but it can also mean rapid change and serious business challenges. If you’re struggling to keep up, working with a part-time CFO can help make sure you make the right decisions and avoid financial pitfalls. 

Need help navigating your business through a growth period? Talk to the team at GECA about our part-time CFO services. 

The post What to expect from a part-time CFO appeared first on GECA Chartered Accountants.

The advantages of a Virtual CFO

If you’re a small company looking to scale up, you need the financial expertise of a CFO. But taking on a full-time staff member at that level is often too costly for smaller businesses. Fortunately, there’s another option: hiring a Virtual CFO (vCFO). That is a CFO available on a fractional or part-time basis.

Outsourcing your CFO requirements needs gives you access to high-level financial knowledge and expert guidance without costing the earth. You’ll get in-depth advice and help to make the right decisions as you scale up your operations.

Here’s why it’s worth taking on a Virtual CFO:

CFO services at the right price

Most small businesses don’t have the funds to take on a full-time CFO, and often don’t really need full-time CFO services either. Hiring a part-time CFO lets you avoid recruitment and hiring costs, and gives you access to expertise when you need it.

Flexible, accessible support 

Many businesses find that their need for financial support ebbs and flows. That’s why a part-time or on-call CFO can be so valuable. Having an expert on hand who knows the business means you can access services when you need them, whether for day-to-day financial functions or one-off projects.

High-level help

When you’re working in a business, it can be difficult to get an objective view of your needs and goals. A CFO offers high-level analysis and support, providing insight and advice, highlighting opportunities and risks, and setting broad strategic goals for the financial side of the business. For young companies in periods of rapid growth, help from a CFO – part-time or not – is essential to establish and achieve financial milestones and avoid unknown pitfalls.

Wide-ranging experience

Hiring a full-time CFO when you’re running a small business could mean compromising on the level of expertise and experience you get. Working with a part-time CFO means you’ll have high-level experience without the price tag. Even better, you can choose to work with a CFO who has experience across a variety of industries. This level of expertise gives you networking opportunities and in-depth insights that you wouldn’t get with an industry-specific expert.

Vital support

Running a business is satisfying, but it can also be a tough, lonely job. Business owners need a sounding board and support person to bounce ideas off, and to offer constructive advice when things seem overwhelming. Because part-time CFOs are usually contractors rather than employees, they can act as sounding boards. They’re still partially independent, which gives them an objective view of the business.

Guiding your finance team

If you’re a small business experiencing rapid growth, your existing finance team may need support to get up to speed. A part-time CFO can help by improving systems and processes, and by acting as a mentor to members of the team.

Crisis relief

Every business runs into a crisis now and then. If you’re expecting the loss of a major contract, losing customers, or facing closure, a part-time CFO will be able to help you find your way through. Rather than scrambling to find an available expert, you’ll have someone on hand to help with cash-flow reports and forecasting, cost-cutting measures, and fund-raising advice.

Navigating growth

Growth is exciting, but it’s not always easy to navigate. If you’re a new business owner or you’re dealing with a new level of growth, it can be hard to know which decisions to make – should you expand into new markets, introduce new products, take on big new clients or focus on your current customers?

Taking on a part-time CFO gives you the strategic insight to turn rapid growth into sustainable business success. Having access to high-level expertise means you’ll not only be making the best strategic decisions, but you’ll eliminate the fear, uncertainty and stress that so often comes with times of change in a business.

Call in an expert – part-time

If your business is moving into a growth period and you need help deciding on your next steps, a Virtual CFO can make things simpler.

At GECA Chartered accountants, our Virtual CFO service gives you access to the insights and expertise of CFOs with experience across a broad range of industries and sectors.

Get in touch now to talk about your CFO requirements and find out how you can outsource to GECA.

The post vCFO – All the expertise, half the cost appeared first on GECA Chartered Accountants.

How GECA’s Virtual Finance

How GECA’s Virtual Finance Team solution set Construct Brands up for success

In today’s fast-paced business world, it can be small innovations that give companies an edge – and sometimes it’s an operational change that can make the most significant difference.

That’s what FMCG company Construct Brands has found with GECA Chartered Accountants’ Virtual Finance Team (VFT) service.

As GECA managing director Giles Ellis explains, the service doesn’t just remove the need for an in-house accountant. It also adds business-critical expertise, for a fraction of the cost.

“If you’re a business that’s big enough to hire an internal accountant, we can replace that person with our outsourced team – a finance manager, junior accountants, clerks, payroll experts and a CFO. That means you get all these specialised experts for less than you’d be paying a bookkeeper or junior accountant – who of course don’t have that breadth of experience.”

More business smarts for less

For Construct Brands, a company already steeped in innovation and with ambitious growth plans, that smarter way of working appealed. This FMCG company creates functional confectionary such as the Wolf Energy bars that are sold globally. When the company’s internal accountant resigned, the obvious next step was to recruit for the role – until the owner, Andy Smith, was told about GECA’s VFT offering.

For less than they were paying their accountant, GECA could deliver a much broader service and deeper expertise.

“We’ve replicated the functionality of internal accounting for less, but it’s not just about cost savings,” says Giles. “We’re reducing the risk of error and fraud. Management now also has access to advice, accountability and governance coaching, budgeting workshops, annual business plans that sync with the overarching plan – and we can help with them too.”

That support goes beyond numbers to upskill business owners in corporate governance and delve into the nitty-gritty of organisational structure.

“Often I find when a business is growing rapidly, people are thrown into the mix with no real structure,” says Giles. “We help make sure that there is a structure and that it’s fit for purpose – that’s all part of it.”

CEO, Andy Smith – “The biggest cost to us with an internal hire was our time. From hiring to managing the employee, it was time spent that we didn’t have. It’s been great to hand it all off to GECA and focus on the outputs instead.”

Seamless onboarding

Any operational change inevitably comes with a bit of upheaval as new systems are embedded. GECA’s propriety onboarding methodology is designed to minimise that.

“We’ve worked out how to do it seamlessly, with no interruption to the business,” says Giles.

The GECA team works alongside any incumbent staff, going through hand-over documents and procedures, so they’re across every detail of the function. From there they build a report of recommendation. For example, a plan for shifting to outsourcing the finance and accounting function, customised for that business.

“That customisation is key,” says Giles. “We want to make sure the new way of working will fit, and that the plan to move them over makes the most sense.”

“Like any major business system change, there has been pain, however effective communication during the transition process by the GECA team has minimised the impact on business.” Andy Smith, CEO.

Harnessing software

The GECA team then springs into action, establishing new procedures, software and integration, to deliver maximum efficiency. They moved Construct Brands from its legacy accounting package to the far more flexible Xero. That meant recoding year-to-date transactions in Xero. Then running parallel reports out of both systems to confirm the data accuracy of the starting position. In the process, they also simplified Construct Brands’ invoicing process, which has to factor in three different services.

“Just that shift has delivered the business a real efficiency boost – where before each invoice had to be manually input, now Xero auto-creates many of them” explains Giles.

Accounts payable is also a lot tidier and easier to manage.

“They had a folder of paper receipts, including printed out electronic invoices. Inefficient, costly and wasteful. Now we’ve implemented Receipt Bank, which lets you scan any invoices, which are sent to Xero to be coded. That means each transaction has a receipt recorded next to it, which allows efficient compliance with the IRD document-keeping requirements says Giles.

“We love being able to photograph those annoying coffee receipts from our phones for easy expense reimbursement.” Andy Smith.

A shift from paper to Smart Payroll has also saved days of work each month. Instead of filling in paper forms, staff can now use an app to apply for leave. Then with a few clicks, managers approve it.

“It goes straight through,” says Giles. “It’s also very fast and accurate. Where they were spending two to three days a month preparing payroll, now that’s a matter of a couple of hours.”

More Effective Reporting

As part of the onboarding process, the GECA team review all current management accounting reports against reporting metrics used by similar businesses. They then compare them against functionality available from the newly implemented systems. This informs the recommendations they can make to enhance the reports.

Of most value though, is the monthly CFO Report, which provides a financial summary to the management team. This includes valuable insights and analysis from experienced management accountants and analysts.  It covers off all aspects of the VFT service including Financials, Cashflow, Payroll, Creditors and Debtors.

Improved Governance

So often, business owners understand how important a strong governance framework is for increasing business value. However, day-to-day operational issues mean this vital business function is neglected. The GECA VFT service includes regular Advisory Board meetings, chaired by the Virtual CFO who is also an experienced Director, using insights and analytics provided by the GECA VFT.

“It’s been great having Giles challenge our thinking which had been entrenched over many years and we value the insights he brings from his work with other clients in the FMCG space.” Andy Smith

For medium-sized business, delivering that all-important edge doesn’t have to come from a cornered market or trademarked products. Clever ways of working – like GECA’s VFT service – can mean smaller businesses are operating with the efficiencies and expertise you’d expect from much larger businesses. People at every level can work faster and smarter, and the business is set up for future growth.

For more information on how GECA’s Virtual Accounting Team service could give your business a competitive edge and deliver a foundation for growth, get in touch with the team now.

The post Case Study: How Construct Brands excels with a GECA Virtual Finance Team appeared first on GECA Chartered Accountants.

The risks of single person accounting:

• Key man risk: With no back up, the sudden departure of the finance person can leave the business unable to operate even the most basic finance functions such as the bank account or invoicing.
• Fraud: A single person covering the finance role prevents the use of the most basic of internal controls such as dual authorisation to limit fraud and errors.
• Compliance errors risk: With no peer review, errors can go undetected exposing the business to fines and sanctions for non-compliance with its obligations to organisations such as the IRD.
• Employee data privacy risk: Unqualified staff with no payroll experience are often responsible for Company HR and Payroll and have limited, if any, understanding of Employer responsibilities in regard to the privacy of employee data.

Reduce the risk with an outsourced finance service

A great way to reduce these risks is to outsource your accounting and finance requirements to a specialist provider such as GECA and its innovative Virtual Finance Team (VFT) service.

The GECA Virtual Finance Team service provides clients with a dedicated team covering all aspects of their business accounting and finance. It ensures the right level of resource available where and when the business requires it. As the business grows, the VFT solution can be scaled up to meet the business requirements.

The benefits in using an outsourced finance solution:

• All aspects of the accounting and finance function are covered from banking, payroll and management accounting to strategic planning and business coaching.
• Frees up management time to focus on core business activities.
• Provides the business with the right level of resource as and when it is required
• Reduces fraud and error risk through the implementation of strong internal controls
• Scalable solution that grows with the business
• Cost savings from reduced internal resourcing requirements

Most importantly, outsourced finance solutions such as the Virtual Finance Team, provide business owners with peace of mind, knowing that all their accounting and taxation obligations are being done, all the time, every time.

So if your in-house accounting department in-house is not delivering the results you want, or you want to reduce your risks and improve your bottom line, using an outsourced finance service such as the GECA Virtual Finance Team can greatly benefit you and the business.

Call Giles now on 0800 758 766 for a no obligation discussion about how the Virtual Finance Team could work for your business.

The post Why you should consider outsourced finance appeared first on GECA Chartered Accountants.