A company’s inability to meet its wage bill is a clear indication that cash, or lack of it, is a primary issue.
Staff are key to the success of any business and if they are not paid, for whatever reason, loyalty and productivity can quickly deteriorate, further impacting on the success of your business.
Cash flow is vital to on-going trading and must be kept within required parameters. If sales and orders decline leading to insufficient cash or assets, you could be facing a potential insolvency scenario.
The reasons can be varied from a market downturn to customers failing to pay on time.
There are usually areas where cash flow can be improved if you examine the day to day running of your business carefully.
Accounts and credit control
In larger companies there should already be an established credit control department. In smaller businesses responsibility must be given to manage this function, ensuring invoices are issued on a timely basisand active policy is adopted on recovery in line with invoice payment dates.
Trading and stock levels
Ensure the business is able to accommodate any new contracts or customers it secures in order to sustain the business plan. Also retaining proper stock levels can free up capital and potentially reduce storage requirements.
Credit and lending facilities
Look to trade on the best terms available by renegotiating terms with suppliers. If your circumstances allow look to negotiate an extension or increase in your lending facilities, subject to a review by an independent advisor.
An additional borrowing facility, providing funding for the payment of wages and salaries (including sub-contractors), which can be unsecured and completely confidential.