Insight Associates provide outsourced accounting and Finance Director services to ambitious and growing businesses. We work as your only resource or with existing staff to give you complete financial support including monthly management accounts, high level financial advice, robust controls and financial systems, funding and business planning, payroll & compliance, VAT returns and statutory compliance.

Successful business leaders have all the information they need to make good decisions…Do You?

Wednesday, September 14, 2016

The Hidden Cash In Your Own Business

All businesses need money to invest and grow, but finding it can often be tricky.
Take the example of “Brian”. His company was at a critical phase. He was taking on so many new customers, he needed to hire more staff and buy them new equipment. And yet, money was still tight. He didn’t have his profit margins right quite yet.

The banks were unwilling to lend him more money.

Yet with a little bit of hard work he managed to come up with thousands of pounds – all of it interest-free.

How did he do it? Well, he realised a simple truth. The money he needed was sitting right under his nose, locked up in his own business.

Like all businesses, Brian’s company had a huge amount of money tied up in things such as property, equipment and slow moving stock. It was just about knowing where to look and how to free up the money.

Start by taking a look at your own business. Where might that hidden cash be hiding?
Do you have any property which is unused? Brian realised he had a lot of spare office space, so he started renting it out – giving himself a much needed source of additional income.

He also needed to upgrade to new, more sophisticated, IT systems. He paid for part of this by selling off his older equipment. This gave him a timely boost which meant he could afford the much-needed investment.

Do you have any old stock which has not been sold or is moving slowly? Why not sell this at cost? It will free up some much-needed funds.

Get in touch with any debtors who are slow to pay. Most companies have these – it’s one of the leading causes of small business failure. So chase late payments more effectively.

You might also encourage other customers to pay up more promptly by incentivising prompt payment plans. Give them a discount for fast settlement of a bill. From a cash flow point of view, you may well prefer to have a bit less money today than a bit more money in a month’s time.

Speak to your suppliers and try to negotiate more favourable payment terms. If you are a regular customer, they may well be willing to give you more time – allowing you to do more with the money.

As long as they trust the money is coming in at some point – and it doesn’t impact their own cash-flow too much – they will probably be willing to offer some flexibility.

Shopping around can also be surprisingly lucrative. Many businesses are paying well over the odds for basic bills such as energy and business insurance. Don’t accept the price your existing suppliers are offering – there’s almost certainly a better deal elsewhere.

Kill waste. Every business has it. Examine all your processes and make certain they are as efficient as possible. If you can make multiple small savings across the scope of your business they will add up in time to something quite significant.

A more effective pricing structure can also unlock more profits. Businesses in the UK miss out on millions of pounds’ worth of extra profits because their products and services are priced too low. Work out if there’s any wriggle room and if you could get away with charging a little more.

The point is this: Almost every business has money to be found somewhere, whether its unsold stock, unused property, equipment or infrastructure. Examining your business can not only unearth some of these hidden cash pockets, but they can also help you refine your business operations.

We can help you take a look at your business and unlock some of that hidden cash. To find out how, hit ‘reply’ and let’s chat.

Wednesday, September 07, 2016

How to Raise Cash For Your Business Without a Loan

You’re looking to raise cash for your business, fast. Perhaps there is a piece of equipment you need to buy, or you want to open another office.

But the thought of taking out a bank loan makes you squirm.

A decade on from the 2008 crisis, banks are still making it difficult for small businesses to secure finance. You know that you’re going to have to jump through hoops with your bank manager. Somehow, visiting their office feels like visiting the headmaster as a child: Daunting.

You also know that bank loans are risky. What happens if you have a couple of bad months, and can’t make your repayments?

Business is stressful enough without having the threat of a loan default hanging over your head.

Then there’s the expense…. Those interest rates make your eyes water.
So what are your other options?
Luckily, you do have alternative sources of finance. Here are some you should consider, before taking out a bank loan:

Finance Lease or Hire Purchase: Do you need money to buy equipment? If so, a hire purchase arrangement might be the best option. This is in many ways a loan, but you’re borrowing the money from the company which sells you the equipment, rather than the bank. Your loan is tied to a specific product. And at the end of your payment term, you own it.

Many people take this option with a car, paying monthly instalments to the company until they own it outright. You can do the same thing with equipment.

The downside is that this can be more expensive over the longer term than buying it outright, but there’s less immediate impact on your cash flow.

Operating lease: This is a slight twist on leasing. At the end of the deal you give the equipment back. This is a good idea of you only want it for a short time, or it’s the kind of equipment which goes out of date quickly, such as IT. You can then organise a new operating lease agreement – it’s a cost-effective way to always have latest technology available.

With these deals you should always read the small-print carefully. What happens if your circumstances change? Do you have any flexibility to get out of the lease agreement? Never assume things will be alright – being stuck in an inflexible arrangement can be difficult.

Peer-to-peer lending: If the banks aren’t willing to lend, perhaps the crowd might do it. Peer-to-peer lending is growing, with companies such as Crowd Cube offering private individuals the chance to give loans to businesses.

Each business is given a credit rating based on the level of risk. This can be more affordable, but as with ‘regular’ business loans, you will still have to make interest payments.

Lending the money yourself: You might be able to invest your own cash in the business. If you decide to do this, you need to protect yourself in case things go wrong.

Set up the loan in much the same way as you would any other loan – that means taking security, arranging interest and a payment plan, just as any other lenders would do.

Friends and family might also be willing to help out with a loan. Again, set this up with all the professionalism and due process you would any other form of loan.  You need to protect them too.

All these have their pros and cons – the decision depends on the exact circumstances of your business. But there is another option: to find the cash hidden within your company.  Every company has some – I’ll tell you how to find it in my next Blog!

In the meanwhile, if you’re ambitious for your company but are not sure exactly how to finance its growth, let’s talk. We can help you organise your finances in the way that makes most sense.

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