In Our Opinion

Liverpool finance expert insists the show can go on for Merseyside despite cash flow worries.

A leading Merseyside Finance specialist has reacted to reports that the region is one of the worst performing economically, with little or no suggestion of recovery in comparison to other areas in the country.

The Liverpool Chamber of Commerce quarterly economic survey suggested that Merseyside is “bouncing along the bottom” of the economical cycle with no obvious way out for cash strapped businesses in the area. The report also suggested that 44% of all business in the region have seen a worsening of cash flow in the last quarter, with the majority of them having been subject to problems for the last six quarters.

Peter Alcock, Partner of Liverpool based Accountants Wilson Henry LLP, responded to the report saying. “Businesses in the Liverpool and Merseyside area have been struggling, just like many other businesses around the UK. However, the insinuation of doom and gloom for our local businesses will only act as de-motivational evidence that Merseyside is behind the rest of the country when it comes to economic recovery and growth”.

Mr Alcock went on to claim that the future might actually be brighter than some are claiming for the region. “The important thing to remember is that there are businesses out there that are still growing and making profit, and other businesses can do it too with the right guidance and strategic approach”.

As a result of the recent report, Wilson Henry has developed a five-point plan for local businesses that want to maintain or increase their cash flow.

1. Consider the risks of whom you are supplying to. You can sign up to a credit checking agency for as little as £20 per month and they will ensure that you are not giving your goods and services away to customers who lack the ability (or the will) to pay for them.

2. Ensure that systems are in place to reduce any potential delays or excuses for receiving payments. Make sure that all invoices are issued promptly and clearly state when the remittance is due by, check that the customer is happy with the goods and deal with any 'snagging'.

3. Efficient credit control is an absolute must. Start chasing your customers for payment as soon as you reach your due date and contact them regularly so that they are clear you mean business. If you don’t want to hand the responsibility of debt collecting to an external organisation, you should be prepared to visit the customer in person to collect outstanding balances and use the small claims court and other similar tools if necessary.

In one particular horror story a petrol filling station had been supplying fuel on account to a business client, did not have their accounts up to date, and had not realised that none of the invoices had been paid for 9 months. The client went into liquidation and the bills were never paid.

4. Alternatively, factoring debts is a popular method for releasing an injection of cash into the business very quickly. Essentially, a third party will pay you a percentage (85% for instance) of your sales invoices, as soon as they are issued, and then pay you the balance (less their fees, of course) when the customer settles the invoice. This can also be useful where you cannot afford the time or money to directly employ someone to act as credit controller for you.

5. More cash can be released by the sale of unused or under utilised assets including excessive trading stock. Regular stock-taking should help you to establish how many widgets you need to carry in stock over a given sales period. If you have years worth of some stock that you bought in error, or overestimated the popularity of, sell it to improve your cash flow. You can also sell that expensive piece of equipment that you thought would be really useful but you have never taken out of the box.

Anybody who would like further advice on protecting business cash flow can contact Peter Alcock at Wilson Henry LLP on 0151 264 8888