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How to improve your cash flow – 8 top tips

Juggling money man

We all know that cash is king and making sure that more if it is coming in than is going out is vital.

Having a cash flow forecast is important, particularly if you have a seasonal sales cycle when you may have to ramp up production, incurring costs before you are able to sell the goods. The forecast will allow you to track where you are with your money each month and show any months where the costs may outstrip the incoming revenue allowing you to plan for the shortfall, rather than it being nasty surprise.

Sound daunting? Managing your cash flow effectively needn’t be too difficult. The following activities are good guidelines for any business, whatever its size.

1. Incentivise your customers to pay you sooner

  • You could put links on your invoices so they can go direct to the payment page – many accounting packages have this functionality. You may have to pay a small fee for it, but if it gets your money in quickly, it’s worth considering.
  • Also – do put on your invoices how to pay you. This may sound completely daft, but I regularly get invoices with no payment details.
    And definitely have your BACs details on there.
  • Some businesses offer a small discount for up front or early payments.
  • Some businesses insist on payment in advance of the work being delivered, or staged payments to save having to wait to the end.
    These aren’t incentives I know, but useful to make sure you get your money before the work is delivered. Training courses and coaching are examples of this payment model.

2. Negotiate better deals with your suppliers.

You need to try and make sure you get paid by your customers before you pay your suppliers. If that equation is the wrong way round, you’re always going to have a problem.

  • Do you know how important you are to your suppliers? If you provide a good percentage of their business, you are in a stronger position to negotiate better terms.
  • Build a relationship with your key suppliers. You may be able to help each other out getting more business.
  • Ask if there are better priced products with the same level of quality that you could be buying.
  • Consider getting in an expert to review your utilities and other costs such as printers, phones and so on. You’d be amazed at what you might be able to save. Procurement specialist companies like ERA could really help.
  • Review your contracts yearly – it’s always good to shop around, and it keeps your supplier on their toes, particularly if you enter into a tendering process for your bigger purchases.

3. Know the invoicing process of your customers

  • Many an invoice hasn’t been paid by larger organisations simply because the correct t hasn’t been crossed. Really understand the invoice process before you invoice. And have it documented so it’s easy for others to follow.
    This is vitally important particularly if it is a large corporate who already has you on 90 day terms. You need to know that the money will be paid on time.
  • For large invoices and complex invoice payment systems – get the invoice checked over by someone else to double check it before it goes out.
  • And get to know the people who pay the invoices – call and speak to them, rather than just email. Build a relationship with them, it makes it more difficult for them to not pay your invoice. I know of one CEO who was owed a large amount of money that he had been chasing for months – he actually went to their offices and refused to leave until he was paid. It worked! I’m not advocating this as standard practice, but sometimes needs must.

4. Have a process in place for invoicing and debt collection.

  • Fix one day a month when invoicing will be done and stick to it.
  • Have your process documented and in place so it’s easy to manage.
  • Automate the process as much as possible. For example, if you have recurring invoices such as retainer invoices which are the same each month, many accounting packages allow you to recreate the invoice quickly.
  • If your accounting system has automatic chase options for late payments, put them on. I have a three tier escalation process that automatically kicks off from the day after the invoice is due.
  • And chase. Have a day a month when you chase – go through your aged debt report monthly.

5. Dealing with habitual late payers

Are there regular customers who always pay late? How important are they to you?
Are you following the correct process?  One of the banks we used to work with used to change their process and not tell us so would suspend payments. It was only because we had a solid process in place that we would find out earlier. And in fact we would often check before month end to make sure the process was still the same.

It can be worth having a conversation with them to ask why they are late each month to see if you can:
a) embarrass them into paying on time
b) discover if they are actually struggling to pay you and to see if there are other options that could help particularly if you want to keep them
c) look at terminating the relationship. One of my clients spends more time chasing small amounts of money than he earns doing the work. Sometimes, it’s just best to walk away from that kind of customer.

6. Don’t over deliver

This may sound counterproductive as we want to delight our customers. But if the delighting of the customers takes many more hours for which you aren’t billing, then your margins are going to be affected. You could try calculating the time/cost/profit to see the effect.

Let’s look at an example:

An IT service support consultant is billed out at £75 per hour and is contracted to deliver on-site support to company for four hours a month.
Let’s say his all in hourly cost is £25.
So – four hours at £75per hour is £300 revenue
The cost is £100
leaving a profit of £200.

If he does an extra unbillable hour as the contract stipulates four hours only, then the cost goes up to £125 and profit is down to £175. Over a year, that’s £300 of lost profit.

Whilst that may not seem much, imagine if this happened on each client so there is also the cost of him not doing billable work for another client. A billable hour for another customer instead would generate you £50 an hour of profit. That’s another £600 a year of profit you’ve missed out on.

Track your time and that of your employees, particularly the customer facing ones. For organisations with multiple employees there are time sheet systems you can use. Something like Replicon is excellent if you have consultants or other people out on client sites and at only £15 per month per user, it’s pretty reasonably priced.

7.Consider factoring

If you can’t get the customers to pay on good or even standard 30 day terms, and you have to pay your suppliers on 30 days or less terms, it can play havoc with your cash flow. If you are a smaller company working with a much larger one, they quite often have non negotiable 90 day terms which can be a nightmare.

To help smooth this problem out, you may want to consider getting paid your invoices by a factoring organisation (could be a bank for example). They will pay you the invoice value less a small percentage and then they will collect the money from the customer on your behalf.
If you want to know more about this have a chat with Lime Consultancy – business finance specialists.

8. Keep some reserves

Tempting as it is to pay yourself a juicy dividend, it’s always prudent to keep some reserves to help smooth out any cash flow fluctuations such as an unexpected late payment, or a client loss.

We deliberately took lower dividends in order to keep money in the business, so we could reduce and finally eliminate our need for factoring of invoices as we had a big enough cushion to be able to cover the discrepancy between the time it took for the our clients to pay us and having to pay our contractors.

So there you have it – Eight top tips for improving your cashflow. Have you any others to add to this list?

If you’d like a copy of a cashflow template or to have a no obligations chat about your business, please get in touch – info@thechameleonguide.com

http://www.thechameleonguide.com

For more useful blogs – do subsribe and you’ll get notified when I produce my next one.

5 great on-line articles to help you get you started with social media for your business

I don’t know about you, but I find the whole world of social media a complex and confusing place. And therefore to be avoided at all costs.  Until recently, Facebook and LinkedIn have been the extent of my on-line presence. Yes, I know that makes me a troglodyte and I’ll be the first to hold my hands up and agree.

But that’s all had to change and I’ve had to dip my toes (actually, it was more a full body emersion) into this arcane and mysterious world.

These days, as a business, if you are looking for new clients, you have to extend your reach beyond good old fashioned marketing, networking and running free seminars.  And that means embracing social media in its various guises.

social media

Unfortunately this doesn’t mean writing one tweet a week, which I thought would be ample, or just posting the odd interesting article on LinkedIn. Oh no. A whole integrated approach is required that links a number of different on-line media together. In my case, I am starting the process using LinkedIn, Twitter, Google +, Pinterest and a blog. There will be video involved at some stage…
As I have my presence on the Business Doctors’ website, I have little influence over that, but for your own business, you will definitely need to include your website in the mix.

The idea being that information cross pollinates and you can use the same material in lots of different ways across each medium. It also means there are more ways to find you on t’internet.

What your mix will be will depend on your business – are you selling to consumers for example or to other businesses, and also what you are selling.

I was going to include some screen shots from the below presentation – in particular slides 9 and 11 which show respectively, the list of content marketing approaches used by organisations and the most popular social media sites used by marketeers – LinkedIn and Twitter being the most popular, but also includes Google +, Slideshare and Pinterest for example. Unfortunately, I couldn’t get a decent resolution on them, so they were unreadable when I inserted them into the blog. It’s a very interesting presentation showing the trends in social media over the last 12 months. The full presentation can be seen here 

I have been very lucky and met the wonderful and inimitable Rob from Silverback Guerilla Productions .  He made me produce a social media strategy, which in itself was excellent as it made me clarify my target audience(s) and what messages I wanted to get out there.  His wizardry has included creating me an avatar and doing my tweets for me (four a day for four days of the week folks, not one a week as I so mistakenly thought). The consequence of his sorcery is that I now have in excess of 600 followers, in less than three weeks. This from a standing start of around 20 is incredible (have a look https://twitter.com/BizDocsSurrey ). I can’t even begin to wonder at what spells he has woven to get that to happen. It is beyond my brain to comprehend. Not only does he do my tweets, but he monitors them to ensure I am following the influencers, amongst lots of other stuff he does for me.*

This is another key word; influencers! It’s all about trying to finding and connecting with the people who can help you promote your business.  Or getting involved in on-line groups (relevant to your business) and contributing to discussions or forums.

Very importantly it’s not about selling – it’s all about providing useful information for others so that they will promote you and broaden your reach and influence that way. It’s a slowly, slowly catchee monkey process and in the words of George Harrison – it’s going to take patience and time. I’m still in the early stages of building up my social media presence and I will be interested to see how it evolves over the next six months…I’ll keep you posted.

It really is very time consuming –I frequently get lost in cyber world rummaging around reading articles, commenting on forums, finding new infographics, looking at groups and so on. That’s where Rob is so helpful to me; he takes a lot of the slog out of it. He’d even write my blog if I asked him – he’s funnier than me, you may well prefer the idea!

And of course, you need to measure, measure, measure!  Make sure you analyse the success of the different channels. For example, which tweets are working and which aren’t and then tweaking what you do to encourage more of the good stuff.

Below are five links to content I’ve found useful. I’ve picked a couple of standard web articles, to a SharePoint presentation, video clip and infographic. I thought I’d better use a variety of different content types rather than just articles – I am, after all, trying to get with the programme:

  1. 10 Laws of Social Media Marketing: http://www.entrepreneur.com/article/218160
  2. Winning On The Web: Seven small business social media success strategies: http://www.businesszone.co.uk/topic/marketing-pr/winning-web-seven-small-business-social-media-success-strategies/58685
  3. How Content Marketing Works: http://www.slideshare.net/brightedge/hcmw-slideshare-links-42313441
  4. Infographic on social etiquette for the different sites – http://www.problogger.net/archives/2014/10/24/a-social-media-etiquette-guide-you-might-find-useful/
  5. A fun video with some incredible facts about social media you ignore at your peril: http://mashable.com/2014/04/23/social-media-marketing-facts/

* No money has changed hands for this glowing testimonial!

I’d like to wish you all a wonderful Christmas and here’s to a successful 2015!

(Almost) Everything you need to know about business networking groups in Surrey

The thing with networking is you need to keep turning up, certainly if, like me, you are new to an area and wanting to get known.  Once you are established, you can cut back on spending your days driving to one networking group after another. The initial challenge is working out which ones to go to. If you’re like me networking is the lifeblood of your business and you may need to go to many.

I had great difficulty tracking down some groups when I first started looking in August (Google doesn’t throw them all up when you search for ‘networking in Surrey’) and only learned about some of them through talking to others at networking events (always a good icebreaker conversation asking about which networking groups people go to).

networking
I thought it might be useful to share with you the business networking groups I have tried in the Surrey area (mostly Surrey Hills) – when they are, what happens at them and how much each one costs.

You could easily spend a fortune going to them all on a regular basis. And you’d never get anything done because you can networking from dawn (literally!) to dusk (and beyond).

When you first start, I would recommend trying out each group several times – most allow three visits before you have to commit to joining. Over time you will find the ones that work best for you and you can start to drop some of the others. I aim to go to between four and six a week, but I very much hope that within a year, I should be able to drop it down to two to three and then only go to the ones that really work for me or that I just like going to!

Below are the 12 groups I have been to over the last four months. I have decided not to critique them, as much as I would like to. This is because different people have very different opinions about the groups they go to and I don’t want to put people off/encourage people from certain groups. What works for me may not work for you.

There are plenty of other groups that I am still finding, but haven’t tried as yet. Please let me know if you’d like me to add any more to this table. If you let me have the information, I will happily include them in the table.

Have a marvelous weekend and see you next Friday.

Karen

Networking group Meeting frequency Structure of meeting Cost*
BoB (Business over Breakfast)National networking group

http://www.bobclubs.com/

Fortnightly6.45am – 8.45 Freeform networking followed by breakfast, 60 second round, ten minute education section, referrals and thank-yous.Only one category of business per group Cost of breakfast – usually around £10Annual fees if you join –

Joining fee – £95

Annual fee – £295

BNINational networking group

http://www.bnisurrey.co.uk/

WeeklyUsually morning slots – 6/6.30 am for two hours Freeform networking followed by breakfast, 60 second round, ten minute education section, referrals and thank-yousOnly one category of business per group.

You have to commit to going weekly. If you can’t make a meeting you have to send a sub in your place.  You are actively encouraged to refer business to other members of the chapter. You may only join one chapter, but can ‘sub’ at others.

Cost of breakfast – usually around £12Annual fees if you join

Joining fee – £125

Annual fee – £475

Get access to BNI Connect – international connection to all BNI members.

4NNational networking group

http://www.4networking.biz/

Fortnightly – vary from morning, lunch and evening groups.Breakfast 08:00 to 10:00
Lunch 12:00 to 14:00
Evening 18:00 to 20:00
Freeform networking, breakfast/lunch, 60 second round, choose three people to have a ten minute one to one with, 10 minute education slot.No restriction to types of business, so there could be more than one of your business there.

You can go to as many different meetings as you like, you aren’t restricted to one group.

Cost of meal – usually around £12-£15They operate a Passport scheme – so you pay £200 for 200 days.
You get extra days if you bring visitors or become involved in your group – there are many roles available.
Fabulous Women and Marvellous MenNational networking group

http://www.fabulous-women.co.uk/

Surrey Groups are:

Cobham

Guildford

Horsham

Oxshott

Reigate

Sutton

MonthlyMorning groups – start at a more reasonable time of 9.30 for two hours Free networking followed by breakfast, 60 second round, 10 minute education slot, get assigned another person to have a ten minute one to one with.No restriction to types of business, so there could be more than one of your business there.

You can go to as many different groups as you like.

Cost of meal£10 for members, £15 for non-members.

Annual membership – depends on type.

A full contributor membership costs £180 a year. You get access to the website to write blogs and post events and the opportunity to do a 10 minute talk at the groups. Standard membership giving you a mini profile on the site and member costs for each meeting at £100.

Prices are going up to

£250 contributor membership

£150 standard membership from January 2015

Women in BusinessNational networking group

http://wibn.co.uk/

Surrey Groups are:

Dorking

Farnham

Godalming

Guildford

Kingston

Weybridge

Meet monthly – lunchtime groupWomen only group Free networking, lunch, 60 second slot, 10 minute education slot.Only one category of business per group Cost of lunch – £22 (but will vary depending on location)Annual membership cost – £220
Surrey Chamber of Commercehttp://my.surrey-chambers.co.uk/eventcalendar.aspx A whole variety of different events, from networking meetings through to workshops and lovely days out. Chamber meetings tend to be in the morning at 8-9.30am Freeform networking followed by breakfast, 60 second slot, 10 minute education slot.No restriction to types of business, so there could be more than one of your business there. Cost of breakfast – usually around £10Annual membership cost – depends on the number of employees.  Plan A for 0-6 employees costs £230 per annum

Get discounted rates for events and the ability to advertise your events on their site.

Leatherhead Chamber of Commercehttp://www.leatherheadchamber.co.uk/how-to-join/ A whole variety of different events, from networking meetings through to workshops and lovely days out. Chamber meetings tend to be in the morning at 8-9.30am Freeform networking, continental breakfast, followed by 60 second slot.No restriction to types of business, so there could be more than one of your business there. Cost of breakfast – usually around – £10Annual membership cost. Depends on number of employees you have. Starting price is £57 per annum.

Top tip!

If you join this Chamber you can get Surrey Chamber member prices for events.

Trusted Contacts – Dorkinghttp://trustedcontacts.co.uk/ Weekly7am-9am Betchworth – Hartsfield Manor Hotel Freeform networking followed by, breakfast, 60 second slot, 10 minute education slot.Only one category of business per group Joining fee – £100Annual membership cost – £160

Monthly meal cost – £53

DRFC (Dorking Rugby Football Club)http://www.dorkingrfc.com/news_detail.php?news_id=744 MonthlyWednesday evenings 6-8.30 Freeform networking followed by a talk from one of the attendees. Then you are given three table numbers and you move round each table every 10 minutes getting to talk to 3-4 other people. Cost – £15 per meetingIncludes one free drink and delicious canapes.
Breakfast Biscotti 

National network

http://www.businessbiscotti.co.uk/

Monthly – 9.30-11.30Hartsfield Manor Hotel, Betchworth Freeform networkingWith coffee, tea and biscuits Joining fee – £35 per annumOr £2.50 per meeting if you are not a member
Women in Business – SussexNot to be confused with WIBN – it’s a different group

http://www.wib-sussex.co.uk/

A variety of meetings, from breakfasts and lunches through to evening events hosted by members Lunch networking meetings follow the usual form. It’s a sit down lunch with 60 second rounds and a ten minute talk from a member Joining fee – £80 per annum plus the cost of the events.
First Friday networkSouth East based network

https://www.firstfriday-network.co.uk/

Meet on the first Friday of the month!Also have a Second and Third Friday. Check out the website for dates and locations in your area. Free form networking. Free entry, no lock outs, no 60 seconds, no need to pre-book. Just turn up with your business cards Free, but you can pay £10 (plus VAT) to become a premier member on their website giving you more prominent positioning and the ability to post a blog.

* Joining fees exclude VAT

Business Networking – what’s that all about then?

business-network-650

In my new role with Business Doctors I’ve become the queen of networking. It’s a whole new world for me and it’s been fascinating. I’ve never had to network before; not actively in the way I do now and I’ve had to navigate the myriad of networking options available.

The key, if you’re new to business networking, is to go to as many different meetings as possible to start off with to find which ones suit you best. If I’m really honest, I was dreading having to network; the thought of having to go into a room of strangers terrified me. When I die and go to hell (for surely I shall) my eternal damnation will consist of every day having to get up at 5am, spend the day cold calling people who absolutely don’t want to speak to me and then spend my evenings at endless cocktail parties where I know no-one. So maybe you can understand my slight trepidation about going to business networking.

Dave finally figured a way of overcoming his fear of talking to people at networking events.

Happily I can report, it’s nowhere near as bad as I had feared. Most meetings are structured so you aren’t having to stand around trying to muscle your way into small groups of people who’ve known each other forever. There is usually some form of standing around chatting, but swiftly followed by sitting round a table where you each get to do your 60 second pitch (top tips on how to do your 60 second pitch can be found here – How to make the most of your 60 second pitch )

Where to start?  There’s BoB (Business over Breakfast), BNI, 4N, Fabulous Women and Marvellous Men, Women in Business, Trusted Contacts, DRFC, Bravo, Surrey Chambers, Leatherhead Chambers and a whole range of others that I’ve not found yet or had time to visit. There are breakfast sessions, lunchtime meetings and evening events.  You could network all the day long if you so choose.  I aim to go to around four meetings a week – but that isn’t necessarily the same for everyone.

My next blog will give you a blow by blow of each meeting group; how they operate and how much they cost…

Most groups require you to pay membership fees if you decide you like what you find, but you generally get to visit three times for free. But note, not only could you spend all day long at networking events, you could find yourself spending a fortune joining lots of groups and not only are there membership fees, but you have to pay usually between £10-£15 per meeting to cover the room cost and food (some charge even more). So budget wisely. Find the ones that you think will work for you before you cough up!

I’ve learned that it’s important to give them at least three goes. There was one national group I tried (that I shall refrain from naming to protect the innocent (me!)) and was about to abandon as we got off to a bad start with one meeting cancelled, another meeting which I got up at 5am (before the crack of the crack of dawn!) to get to, only to be met by a blank face by the manager of the pub who knew nothing about the meeting. And then when I finally got to a meeting, there were only six people there and it was a decidely poor session.  I got talked into going to one more, at which there were more people and it ended up being a really good meeting.  As a consequence of that meeting and going to a couple of others at different venues, I not only got persuaded to join the group, but agreed to help with the marketing of the Dorking group! A result I would not have predicted three months ago. So do give them three goes.

As I mentioned  earlier there are variations on the theme of what goes on at each meeting. The majority of them give you a 60 second slot to tell them about you and your business and what you are looking for.

One group organises ten minute slots with three people of your choice to learn more about them and what they do, others have four or five of you sat round a table and spending ten minutes talking and then they swap you round so you get to talk to another four people. These are great as you really get to find out more about people and their businesses.

What you don’t want to do is actively sell. There’s nothing more tedious than someone who plugs their business shamelessly and then hounds you afterwards with emails. One particular gentleman wouldn’t take no for an answer and bombarded me with email after email as to why I should join another group he was working with – with mixed fonts and colours that affronted the eyes! When I invited him to a seminar, he even used that as an excuse to push his group. It is very unlikely I will refer any business to him.

Don't turn your first networking meeting into a sales pitch

Other groups expect a weekly commitment which can be quite onerous, but the quid pro quo is that I get to be the only business coach in the room. This group actively encourages referrals and you are measured against the number of referrals you give.  This again can sound quite daunting, but it at least encourages you to think about what business you can give others.

And this is also important – networking is all about what you can do for others. Business Doctors heavily subscribes to ‘paying it forward’ and this is encouraged by many groups. The idea being that if you help others out, hopefully some of them will then start helping you out by referring business to you at some stage in the future. Of course, you need to trust the people you are referring into your customers and know that they can do a good job, otherwise your reputation is at stake.

So for me networking has a number of purposes:

  • Get known in my area for what I do
  • I get to meet a lot of people – most of whom are small business owners or people who work with small business owners.
  • Helps me build my database of contacts who I can invite to my (free) seminars
  • I meet people with whom I may do business directly
  • I meet people with whom I may collaborate and refer business to. My aim is to have a power group around me of people I really know and trust who I can have complete confidence that if I refer them to my clients they will do a top job.

I have already met some great people along the way and it has definitely got easier the more I’ve done it as I’m starting to meet the same people at different meetings and I’m starting to relax and show the real me rather than the slightly frosty businesswoman I can be perceived as on first viewing. I’m not like that at all, just shy when I first meet people and I cover it behind a veneer of professionalism. The added bonus for me as I am new to the area, is that I will probably end up with some lovely new friends too.

Business networking is starting to become an enjoyable activity for me and even having to get up at silly o’clock a couple of times a week is less of a chore.