Unsure about how well you are managing your cashflow? We are here to help you identify and overcome cashflow problems within your business.

Cash is like water. They can both go down the drain – but they both work best when they flow. Both can lead to the creation of riches, employment, life and vibrancy if well managed – even in tough times. However, when cash ceases to flow it’s likely to lead to a sick business in danger of terminal demise. 

Understanding your cashflow 

You’ll recognise when you have cashflow problems easily: you’re probably juggling who to pay and which payments you can afford to delay. Perhaps you’re not sure how you’re going to pay the wages next week and it’s likely that you’re having trouble sleeping soundly. 

What causes cash flow problems?

There can be a number of reasons: inadequate sales, not enough margin, changes in customer behaviour – including Covid-19, lack of stock… The list goes on.

The cause isn’t always under your control, but it can usually be addressed. What’s more, it needs to be addressed – otherwise, the problem will repeat itself. But right now, don’t run out of cash or you won’t have the luxury of time to fix underlying problems. 

What can I do? 

There’s a lot you can do to help yourself quickly. You need prompt action to address the short-term cash position. You may need the support of your bank which you’ll gain by making them have confidence in you. You need a clear plan.

A simple guide to solving a cashflow problem includes these steps:

• Understand and accept the problem
• Establish what you need and when
• Get buy-in from your whole team
• Identify sources of funding
• Identify savings that don’t fundamentally undermine the business
• Plan for action (with professional help, if you don’t have the skills or resource)

Your next steps

Finance specialists at Ampios, in conjunction with the North & West Lancashire Chamber of Commerce, are providing a free Business Cashflow Webinar on Wednesday 2nd September 2020 at 10.30 a.m. 

To put your business in a better situation, with a deeper understanding of the vital importance of cash and actions to take, book your place now.

Take a look at our other blogs about solving funding problems here. 

Businesses are facing tough times in light of Covid-19 and a deep recession. Some businesses will struggle and be beaten but if you’re a fighter, you can overcome these tough times. Focus on key priorities with agility, planning and determination and you can not only survive but thrive in the future. 

We can help you find the light at the end of the tunnel.

Here to Help

We want to be in your corner on this one, so we’ve put together a series of programmes and webinars designed to provide real-life solutions to what needs to be done. The first phase of free webinars commences on 2nd September 2020, dealing with perhaps the priority of all priorities: how not to run out of cash. 

 

Webinars

Cashflow – Cash is tightening and not sure what to do next? You absolutely, definitely must not run out of cash. We’ll show you how.

Wednesday 2nd September at 10.30 a.m.

 

Negotiation in Uncertain Times – There are many things a business will now have to negotiate, not just prices: do it badly and your business will suffer. We’ll show you how to do it well and get results.

Wednesday 9th September 2020 at 10.30 a.m.

 

Importance of a Good Banking Relationship – You’re likely to need the support of your bank, but that support will be conditional on the confidence of your bank in you. Our insightful banking experts will show you how to generate that confidence.

Wednesday 16th September 2020 at 10.30 a.m.

 

Urgent Brexit Preparations – Ignore it at your peril: many businesses will be affected and some of them in ways they haven’t realised. Whether you’ve done some preparation or not, don’t miss vital insights and actions as significant disruption draws closer.

Wednesday 23rd September 2020 at 10.30 a.m.

 

Investment Readiness – Investment comprising loans and equity will be tougher now but for the right businesses, with the right leaders, it can be done. Our experts will show you how to impress and gain the investment you need.

Wednesday 30th September 2020 at 10.30 a.m.

 

Leadership – With the disruption that’s coming, key people in your business will need to step up and lead from the front. If they do it well, they’ll be the reason the whole team is motivated and implements your game plan to succeed. Learn crucial insight and techniques to develop true leadership.

Thursday 8th October at 10.30 a.m.

 

Register Now

Your business will need to be match-fit to face these tough times, so get it ready to fight for its future by joining in these webinars. For full programme details and to register, click here. 

Consultant, Coach, Mentor, Adviser or NED?
It doesn’t matter how experienced you are or how long you’ve been in business, you can’t know everything. Sometimes, you just need a bit of help or simply pointing in the right direction.

 

Who can I turn to?

Ideally, what you need is someone experienced with a fresh pair of eyes and another perspective looking at the problem with you. Even better if they’ve seen it before and can show you how to deal with it. 

Who do I choose?

Persevere with a Google search and you’ll find that there is help out there in the form of consultants, coaches, mentors, advisers and NEDs (Non-Executive Directors).

The titles may be something you aren’t overly familiar with and can leave you feeling overwhelmed, wondering what these people do, how they do it and which will be best for you at this particular time? 

In this article, we will go through some of the different options of people you can approach when you need a bit of help.

 

Consultants

Consultants are ideal for specialist, individual projects that you have neither the knowledge nor time to complete yourself.

They are:

• Experienced, senior professionals who understand your business and your problem and offer a solution.
  This solution will be delivered in an agreed timescale for an agreed price. 
• Work closely with you and your staff on a project basis.
  They work with you for as long as it takes to complete the specific project. 

The stereotype of consultants giving the impression that they know it all, charging you for a glossy report with little or no fresh content and telling you how to run your business is largely false, so don’t be afraid to approach a good consultant for help.

 

Coaches

Coaches are used to help you to become better prepared to address your problem yourself. 

They: 

• Allow you to see your business from a different perspective, explore your thought processes and enable you to find alternative ways to do things. 
• Provide you with the confidence and mindset to face your business concerns. 
• Work with you for any length of time.
  Coaching relationships are usually for short periods but can last for years when necessary. 

Find a coach you can relate to, confide in and trust.

 

 

 

 

Mentors

Mentors are suitable for MDs or business owners who need somebody to share their experience with you and act as sounding boards for your ideas. 

They:

• Usually have had careers at a senior level in the public, private or 3rd sectors.
  Have experience of business management, facing and overcoming problems similar to yours. 
• Offer experienced guidance and advice for your ideas and plans. 
• Are often from a different business sector to you, offering a different perspective.
  If your problem is sector-specific or covered by specific constraints and regulations, you may need a mentor with similar business experience to you. 
• Mentoring relationships usually last between 3 and 12 months, depending on individual circumstances. 

Currently, a large portion of the UK is well covered by various business mentoring schemes which endeavour to match clients with mentors who have the appropriate experience. Often, these schemes are partially or even fully funded so make sure you check these out! 

 

Board Advisers

Board Advisers are perfect for longer-term guidance on business growth and business issues. 

They are:

• Independent Board Advisers who sit on your Board – even if the Board only consists of you and them. 
• Extremely experienced with a range of business skills and an appreciation of good governance principles, financial propriety and risk management. 
• Many work as part of a consortium (similar to ours at Ampios).
  This means they have immediate access to the expertise of others in addition to their own. 
• Ask considered questions, test your reasoning and thought processes – helping you to take your business where you would like it to go. 
• Bring a fresh perspective to the Board.
  Won’t be influenced by “How we normally do it”. 
• Do not have management responsibilities for your business.
  They are responsible along with the Board to hold management to account. 
• Not directors and are not registered as such with Companies House. 
• Self-employed and paid on an invoice or retainer basis.
  It is usual to agree renewable, 12-monthly contracts with them. 

 

Non-Executive Directors (NEDs)

NEDs are appropriate for adding credibility to your business or due to the requirements of your Articles or Objects. 

They are: 

• Independent Board Advisers, performing the same function as advisers. 
• Registered as Directors of your business with Companies House.
• Paid as Directors i.e. employees as opposed to the self-employed contractor status of a Board Adviser. 
• The number of NEDs you need on your board varies.
  This depends upon your Articles (or Objects, if you are a charity). 
• Have a vast network of useful contacts.
  They will be willing to share these with you if needed. If they haven’t experienced your problem themself, they will know someone who has. 
• Work with you for a fixed time, usually 3 years. 

 

Which is right for me?

All of the above professionals come with their advantages and potential problems. Hopefully, knowing the nature of your problem and the needs of your company will assist you in choosing the best help for you. 

Be aware that all of these groups have people who are more experienced or qualified than others. So you must conduct research and find someone who can demonstrate that they have the skills, knowledge and practical experience to help you. But the help is out there and you are not on your own. 

 

We can make finding the right help for you simple. 

At Ampios, all members of our team are Board Advisers and all have previously worked as Consultants. Most of us are NEDs. Many of us are also Mentors and we have some excellent Executive Coaches in our ranks. 

Together, we’ve seen it all and done it all. So, if you are searching for help, don’t hesitate to get in touch.

 

Martyn Jones, NED, Board Adviser and Mentor 

 

If your business suffers a funding problem, there is a possibility that it may cause you to breach a financial covenant. What happens if you do and how can you fix it?

 

What is a Covenant?

Covenants are the terms set out within a loan that require you (as the borrower) to fulfil specific conditions. Also, they may restrict your actions or activities. The finance documentation from the bank or other lenders will invariably contain covenants – and you will have signed, agreeing to adhere to them for the duration of your borrowing arrangement.

Covenants might be:

• Financial – minimum interest cover, debtor cover, debt service cover.
• Information based – providing management and annual accounts within specific time frames (e.g. annual accounts within 6 months of your financial year-end).

 

 

Consequences of Breach of Covenant

A breach of an agreed covenant will have negative consequences. So, if you have breached a covenant or believe you might breach a covenant, then you need to take action. It is helpful to understand how different stakeholders will respond to a covenant breach.

 

Lender’s Reaction

This is an opportunity for the lender to re-price, blaming the increased risk to them. The lender could also request additional security or place the business into “intensive care”.

If you breach a borrowing limit you could also incur this course of action.

 

Auditor’s Reaction

A continuing breach of covenant will concern your auditors when they sign off your business’ Annual Accounts to be filed at Companies House. If your auditor provides a qualified opinion, due to these issues, then that could affect your business creditworthiness. The credit rating agencies and, perhaps, your suppliers will look at your Annual Accounts for any negative disclosure.

 

Suppliers’ Reaction

If your credit score is lowered due to a breach of covenant, your suppliers could worry about your ability to pay and reduce your credit limits or, even, request payment before supplying goods.

 

As such, a breach of covenant could have knock-on effects on your business and exacerbate your original financial problem. Early action is always useful. Telling your bank or supplier that you have a problem my sound like washing your dirty laundry in public but keeping quiet and allowing them to find out after the event will only erode their trust.

 

 

 

 

What should you do next?

The consequences of a breach of covenant could significantly impact your ability to trade but there are people out there who can help.

Ampios have years of experience across a range of sectors. If you need support with any funding problems within your business, don’t hesitate to get in touch.

 

Alan Wilson – Specialist in Banking Relationships & Borrowing Arrangements