Top tips on maximising the balance sheet
10/9/2008
Cash is king, as the saying goes, and there has never been a more important time to effectively manage the financial risks of your company. Treasury management in 2008 is high on the agenda as businesses have to keep a keen eye on cashflow to survive and stay ahead of the competition.
What are the top tips for companies looking to make sense of their balance sheets and maximise their assets?
Top tips on maximising the balance sheet
1. Negotiate with creditors to extend payment terms.
2. Factor your debts. If you have cash assets tied up in debt, put a factoring/invoice discounting package in place.
3. Improve your collections. Consider outsourcing this to a third party if resourcing this function internally is a challenge.
4. Make fixed assets work for the business. Look at sale and leaseback options to raise capital via plant, machinery or property. However, be sure to take a recent valuation on property and be prepared to have this re-valued every 3 months.
5. Re-visit old costs in the business. Analyse all fixed costs, can you change energy providers, negotiate better terms with suppliers? For instance, if a factory site is no longer at full capacity, there may be opportunities to negotiate a rate reduction with the landlord.
6. Re-structure any VAT or PAYE debt with HMRC. Engage a professional able to work with the HMRC to arrange a time-to-pay arrangement to ring-fence any Crown debt.
7. Assess staff efficiencies. These are tough decisions, but the sooner they are made the sooner the business can be stablised.
8. Move to a just-in-time stock system. This will help to reduce the level of working capital tied up in stock.
9. Sell off any slow moving stock. Even if forced to do this at cost, it is better to reduce storage costs.
10. Use an interim manager. If there are skills gaps in the business that are preventing it from making it through a tough economic cycle, such as a strong Financial Director, then consider using an interim manager to guide the business through a challenging trading period.
