Prevent, Recover, Maintain.

As a small business owner, managing your finances is one of the most important tasks you'll face. One critical aspect of this is ensuring that you have strong Cash Flow management, and payment practices in place.

Financial Liquidity, or Cash Flow is the movement of funds into, and out of your business; it's a key indicator of your business’ overall health. Understanding the pipeline of your business, and managing it effectively will help you make informed decisions now, plan for the future, and ensure that your business remains sustainable.

Frequently; expenses are covered - but you don't have access to the income yet.

One of the most significant disruptions to Cash Flow is missed payments. When too many customers or clients don't pay on time, it will create a choke point; making it difficult to cover expenses, or make growth investments in your business. This is when good business practices make all the difference.

By focusing on Cash Flow management, as well as implementing effective policies and procedures, you ensure that your business stays stable, and sustainable over the long term.

PREVENT

Understand Your Cash Flow Pipeline:

The first step towards managing business finances effectively is to understand how your business’ Cash Flow works. This means having a clear picture of your income and expenses, along with any outstanding payments or debts.

Create a document which outlines all the money that flows in and out of your business over a given month, or quarter. This will help you identify any patterns within your own business or industry, such as predictable changes to income or expenses occurring at regular intervals.

Invoice Promptly, and Follow Up

To ensure that you receive payments on time, it's crucial to have a system in place for invoicing, and following up with clients or customers who have outstanding payments. Make sure that your invoices are clear, concise, and include all the necessary information; such as the payment due date, and terms.

Always send out your invoices promptly, and follow up with customers who haven't paid on time to remind them of their obligations.

Outsource Sales Ledger Management

You can take steps as a business to prevent late-payments from occurring in the first instance. Much of the time, the issue is revealed to be that invoices were missed, or never received. When this happens, it is an indicator of a procedural issue within the fabric of your organisation.

Ourselves, XFS Limited, is one such company who will provide professional support by supervising your Sales Ledger, to manage and take action upon where required.

RECOVER

Advise Late-Payers

Simply an email, a phone call, or a letter, sent to the indebted party advising them that an outstanding payment has been identified is sometimes enough - which reiterates our point that a volume of missed payments are genuinely missed.

In the case that a customer raises a dispute, you are within your rights to take legal action to remediate the situation. However, this can be a rather harsh approach in the first instance, and we would encourage you to take a few more steps before this stage, as it can very often sour the relationship between yourself and the customer.

Seek External Support

Following attempts to obtain what is owed, if you are still facing trouble you may turn to an external provider, such as XFS Limited. With the right approach, as opposed to harming business relationships, it can forge stronger bonds.

‘Bad Debt’, or payments that have been outstanding for a significant length of time are usually long forgotten by those indebted. It can create a tense situation, and handling this personally can be difficult and emotions can often cloud the path to resolution, especially as a small business owner.

Trust your own judgement to weigh up service providers, and seek a partner who matches the morals and conduct of your own business. This is how to feel confident that an amicable result will be achieved; when all interests align to realise a common goal.

MAINTAIN

Be Available to Customers

Ensure that you have a procedure in place for customers or clients to contact you, regarding payments or otherwise. As an example, with this in place it allows familiar faces who are struggling to pay on time to contact you, and potentially renegotiate payment terms which suit both parties.

Many businesses cannot, or do not want to have an office division. In this case, it is possible to outsource this, too. XFS Limited offers a range of sundry services of this nature under XFS Flow. This includes Inbound & Outbound calls, Complaints Management, Omni-channel Communications support, and more.

By implementing these tips and focusing on Cash Flow management, you can help ensure that your business stays financially stable and sustainable over the long term.

While missed payments can certainly disrupt your Cash Flow, by having effective systems and processes in place, you can minimize their impact, keep your business on track, and maintain relationships with valuable customers.

Remember; positive Cash Flow is key to achieving long-term success as a business.

Cash Isn't Flowing.

How many small businesses are chasing late-payments?

11% of UK SME employers applied for finance in the last 12 months. 37% of those did so for “working capital or cash flow reasons” (FSB, Time is Money, 2023).

• Businesses aren’t applying for finance to facilitate growth, rather to stay operational in the first place.

• The largest contributing factor is still the cost of doing business - particularly the hike in energy bills and overheads.

Government Energy Subsidising Will End

Although the closing date for the Government’s energy price-cap has been delayed multiple times, it will inevitably end. More permanent solutions must be devised to reduce the burden on small businesses.

With Spring turning to Summer, heating bills will be reduced, however for many industries this doesn’t reduce the energy they consume by a whole lot. There are other, larger uses of energy inflating their costs.

For example, STEM industry organisations often have facilities and environments which must be kept at a controlled temperature at all times; Manufacturing firms alike require a high volume of electricity to use their tools and equipment. These are just two examples of how hardship could continue for certain industries.

Collective Reactions

The Federation of Small Businesses recently called for Energy Providers to finally hold out an olive-branch to their SME customers. General consensus among the small business community is that providers are ramping up prices to protect them from customers going bankrupt, leading to unreasonable demands for payment in advance.

Recommendations made by the FSB include halting the demands for large, up-front payments which could ultimately put thousands of small organisations out of business, in favour of a “time to pay scheme”, a payment plan structure that echoes tactics already employed by HMRC.

One particularly interesting recommendation, made towards the Small Business Commissioner (SBC), is to provide consequences for consistently poor payment practices - excluding these firms from public procurement, and reinstating a “name and shame process” through proactive investigations.

Currently, the SBC does not have the correct powers to address these issues.

Examine Your Situation

Everything starts by looking at your sales ledger.

It’s often difficult for a business owner to deal with recovering payments directly whilst protecting their relationship with the client; especially if it’s becoming a frequent occurrence. At other times, missed payments go unnoticed, meaning that invoices have likely long-since been forgotten about. This is extremely common, and fixable.

Seeking professional Debt Recovery services is often the best option in these cases. It may seem intimidating at first, but the key is to partner with a firm whose ethos and conduct match your own standards.

XFS Limited is one such professional firm. We offer said Debt Recovery services, along with on-going Sales Ledger Management, and other outsourced offerings. With this, you enjoy the peace of mind to focus on the rest of your business.

Within our team, there is a mountain of experience in the Financial Services industry. Their guidance and support throughout the recovery process is second to none, in which, when desired, they can advise and mentor you to have better oversight of the cash flow pipeline through your business.

We speak directly to that 37% of businesses out there - we already know you need our help. Let us convince you that XFS is the right partner for cash flow challenges.

☎️ 0141 483 3345 🌐 www.xfslimited.co.uk 📧 info@xcelfinancialsolutions.co.uk 🔔 @xfslimited

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Thriving Beyond the City: Reform & Growth for Small-Town Businesses

In Scotland, the Highlands & Islands council area is an extremely challenging place to operate a business -- especially for local SMEs and self-employed traders.

Although much of the country now has the infrastructure for high-speed internet, cloud-based computing, etc., it's still unreliable for many homes and businesses. Additionally, a large percentage do not have the skillset within their ranks to use the right new technology effectively, and to their advantage.

In fact, it can quickly become suffocating when a small-community business takes the plunge, but starts to face problems with adoption. Sometimes it can even harm their business more, than if they had never touched it to begin with.

This is why considering the sustainability of such a technology upgrade is so important.

Why do small-town, and rural businesses struggle to keep up with their big-city competitors?

• Inferior broadband and internet infrastructure

• Lack of / outdated website, and a weak brand-presence

• Slow and intermittent administration of calls, orders and/or bookings

• Ineffective financial monitoring, cash-flow management, and payment practices

• Bland relationships with customers and clients

In light of the risks, it's understandable that businesses may be apprehensive about implementing new technology directly into their operations.

However, there is a solution that benefits everyone. Outsourcing non-core tasks such as Sales Ledger Management, administration and other back-office functions to specialized service providers can be an effective way to reduce costs and increase cash-flow.

'Isn't Outsourcing only for big companies?'

Take the example of a Freelance Gardening operation. Two experienced landscapers get together to start their own business. They rent a warehouse to store materials, with a few parking spaces out front for their vehicles.

Without the need (or the want) for an office, one of the two founders handles any administration and finance; calls and emails come straight into their mobile regardless of their nature, and they process invoices through a well-known, cloud-based accountancy platform.

You can see the picture we're painting, can't you?

As opposed to adding responsibility by opening a whole new division within a business (which for our example scenario is really a sledgehammer-walnut situation), outsourcing back-end tasks such as unpaid invoices and Sales Ledger Management can support growth, whilst simultaneously freeing up resources in the main operation of a business.

By partnering with experienced professionals, rural businesses are able to tap into the benefits of a full-fledged office division, without incurring the costs and risks associated with hiring and training new staff or implementing new systems themselves.

How does it all work?

Of course, we'd like to use ourselves as an example.

As an outsourcing partner, XFS Limited becomes a Cash Flow pseudo-department to your business. We can take over things like unpaid invoices, Debt Recovery, Cash Flow analysis and diagnostics of your financial situation; as well as additional sundry services such as:

• Inbound & Outbound Call Handling

• Omni-Channel Chat & Complaints Management

• Examination of, and Recommendations for Internal Policies

Depending on consultation, we assess what kind of arrangement would best suit your business in terms of budget, individual services, and payment structure.

Debt Recovery can be delivered as a one time service, with a flat fee if you only have a few unpaid accounts that do not require such regular monitoring. Alternatively, if you have lots of clients or customers who regularly fail to respond to invoices, it may be more suitable to opt into a commission-based structure over the course of a longer time period, complete with formal contract.

Similarly, we can provide a Sales Ledger Management service as a long- or short-term arrangement, which can then be topped up with one-time Debt Recovery strategies as and when it is required.

Ultimately, outsourcing your Financial Administration as a small business is a very efficient way to stay competitive with the bigger fish, without running the risk of growing too large, too fast and suffocating your Cash Flow further.

☎️ 0141 483 3345 🌐 www.xfslimited.co.uk 📧 info@xcelfinancialsolutions.co.uk 🔔 @xfslimited