Release date: 2nd October 2014
Recession end reinforces need to stay
on top of capital pressures
As the UK moves out of recession, growing businesses are being reminded
to keep on top of cash flow and their working capital requirements in order to
capitalise on opportunities.
That’s the message from Midlands based finance experts Cranfield at a
time when the UK has finally surpassed its pre-2008 financial crisis with GDP
levels reaching £383 billion, according to a recent report from the Office for
National Statistics.
As growing businesses move out of the recession and fill their order
books, they need to ensure that they have the resources in place to cope with
growth and don’t end up overtrading. The answer, according to the Cranfield Group,
is to have efficient management information systems, maintain an up-to-date
cash flow forecast and agree payment terms with customers in advance of
contracts commencing. Those growing firms that still find themselves running
out of working capital are also being urged to seek alternative sources of
finance before it’s too late.
Alan Jones, Director of Cranfield Business Finance, part of the
Cranfield Group, explained: “It is not
uncommon for businesses to grow more quickly than they can manage following a
recession. When the required resources for growth are not in place, businesses
often find that working capital reduces and it’s not uncommon for companies in
this situation to dip into their VAT and PAYE payments in order to bridge the
gap in funds.”
“It’s also important for any
rapidly growing business to review its existing credit control procedures and
ensure that they have a sufficient cash flow facilities in place to support a
period of growth. Alternative finance options can be a key enabler of growth
for businesses and help them fund the early stages of expansion before they
start experiencing the longer term benefits of post-recession growth.”
Cranfield is advising directors to review all their
outstanding debts and to adopt a diligent approach to managing accounts
receivables. Other steps directors should consider include communicating clear
payment terms to customers, ensuring they invoice promptly upon completion of
work, and following up on outstanding payments.
Industries such as construction typically issue 90-day
payment terms, which can impact on suppliers’ cash flow during periods of
growth. Negotiating shorter payment terms with customers like the 30-day period
advised by the government, can significantly improve cash flow and reduce the risk
of businesses having to use up too much working capital.
Brett Barton, Director at Cranfield Business Recovery, also
part of the Cranfield Group, offered the following advice to directors.
“Whether your business is in financial
difficulty or not, establishing a working relationship with a trusted financial
expert is critical to understanding your financial structure. The current
economic climate is opening up a number of avenues of future growth and
development to businesses, but what directors need to do now is fully explore
all the financial options available to them to ensure they can move forward
strategically.”
The Cranfield Group currently offers a free financial health
check to businesses, which assesses the financial solutions required by growing
businesses and can help advise on the tools required to manage future growth.
- ENDS -
About Cranfield
Business Finance
Cranfield Business Finance provides a range of financial
solutions to meet the needs of businesses across the Midlands, Warwickshire and
Gloucestershire regions. It is part of
the Cranfield group of companies, which also comprises Cranfield Business
Recovery.
The Cranfield Business Finance team has over 25 years
banking experience which gives them the necessary skills and experience to help
SMEs, whether it’s improving the flow of funds, buying new premises or even if
companies are looking for a partner for a development project.
The services offered are completely independent and
impartial, which means they are not tied to any lenders and will search the
market for the right relationship for their clients.
For more information
contact
Nicola Pittaway, Bridge PR & Media Services Tel: 024 76
520025, Email: nicola@bridgepr.co.uk or Alan Jones, Cranfield Business
Recovery, Tel: 024 7655 3700, Email: alan.jones@cranfieldbusinessfinance.co.uk.
Editor’s
note:-
Cranfield Business Recovery is a firm of
insolvency practitioners which employs 16 staff in its Coventry office. At present they are the number one insolvency
practice in Coventry. It was set up in November
2001 to offer a professional service to people with corporate, business or
personal financial problems and to work closely with professional advisers to
assist their clients. The firm is led by licensed insolvency practitioner, Tony
Mitchell. It aims to offer a bespoke service in a friendly
environment in circumstances that are often difficult and stressful.
For further information, please contact:
Denise
Taylor, Bridge PR & Media Services on tel: 024 76 520025, email: denise@bridgepr.co.uk or Brett Barton, Cranfield Business Recovery on tel: 024 7655 3700,
email: brett.barton@cranfieldbusinessrecovery.co.uk.