Finance Top Tips

1. Aim to raise more money than you need. You often only have one chance of raising money so
take a close look at what you think you will need. It is very difficult to go round a second time and
ask for more. If your figures are too conservative, it could make your business proposition unviable.

2. The bank is not your only port of call. There could be better and cheaper alternatives to
accessing finance, depending on what you need. Work out exactly how much you need and for how
long you will need it. Re-mortgaging your house, for example, would not be suitable if you need
money for the short-term. If you need money to buy equipment, consider renting and leasing
options.

3. Keep the people who matter in the know. Ensure you recognise the needs of all the people
involved in your business, and don’t keep them in the dark. Banks and the Inland Revenue, for
example, are more likely to be sympathetic to your needs if you keep them informed about the
business.

4. Cash is king. If you are going through a cash shortage, tell all the people who will be affected.
Contact your suppliers and ask if you can renegotiate your credit terms by extending the time you
have to pay them, or by paying in instalments. But make sure you can afford any re-negotiated
terms as this will help to restore people’s trust in you and your business.

5. Set strict payment procedures. A sale is not really made unless it has been paid for. Never grant
credit to customers without checking their background. When customers ask for credit, ensure you
get references from other suppliers who work with those customers. Ensure payment terms are
included as a condition of the sale. And STICK to them!!

6. If you are chasing debts, stick to set procedures. For example, you could send a duplicate
invoice to begin with a deadline for payment, and follow this up with a telephone call after the
deadline has expired.

7. Be conservative and realistic with your forecasts. This is the basis on which you raise money,
negotiate premises and order raw materials. Forecasting does require a certain amount of
estimating, but make sure your figures have some grounding in fact. Try to discipline yourself by
making forecasts on a monthly basis. If cash is very tight, forecasting will need to be done on a
weekly or even daily basis.

8. Keep the books or get a good bookkeeper on board. Keep a record of everything, all
payments, bank statements and bills. Bookkeeping may be one of the more tedious aspects of
business for small firms, but it’s important to keep a firm track on money going in and out. There
are a variety of software packages available to help you computerise your accounts.

9. Shop around for your banking needs. There is so much competition between banks at the
moment that you can afford to take your business elsewhere. But insist on finding out as much as
possible about all the charges that apply to your type of business. If a bank tries to tempt you with a
limited period of free banking as an introductory incentive, make sure you know what the charges
will be when this ends. Limit the number of transactions you make and use credit wherever
possible.

10. Everything is negotiable. Don’t be afraid to negotiate any and everything, from the rate of
interest on a loan to the time you should start paying back the loan, to when you need to pay your
suppliers. It never hurts to ask!

Ian Bysouth Consulting © 2009