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Our CFO Saved Christmas, Reveals Santa Claus

Santa Claus, now in his 1,747th year, reveals for the first time how his part-time Chief Financial Officer helped Christmas Inc. claw back from near-disaster.

“Last year we were hit by so many problems. Money problems. Health and safety issues. Capital funding problems. Bad PR. The lot.

Fake News

“Someone posted a story on Facebook last August that said I hated mince pies and was allergic to milk. Dreadful business. I had bags and bags of letters from angry dairy farmers and retailers. And emails from worried parents asking what they should leave out for me on Christmas Eve if I didn’t want mince pies and a glass of milk. Some got a wee bit personal, a tiny bit sarcastic, which wasn’t nice. That went on for several weeks.

“Not long after that another story appeared that said I mistreated reindeers. Someone started a Go Fund Me page for Rudolph and the rest of the gang and children across the world were urged to donate their pocket money. Luckily, the authorities tracked down the culprit before any money changed hands. That man was definitely Number One on my Naughty List last Christmas. Those two stories were really damaging. It wasn’t a happy time at Christmas HQ while all that was going on.

Elf and Safety Issues

“Then we had a scare with compliance. One of the elves in the workshop slipped on some wrapping paper and broke his leg. We hired a Health and Safety inspector to help us prevent more accidents and she found that the workshop wasn’t fit for purpose. It’s a very old workshop and needed to be updated. We’d just added bits on as we grew so it was a bit higgledy -piggledy but we loved it all the same. Getting it modernised cost a fortune.

“The Health and Safety Inspector hit the roof when she discovered that some of the elves were sleeping underneath their benches. I tried to explain that they do it because they love making toys and have such fun at work they don’t want to leave. But she said that it had to stop immediately. She insisted on staying in the workshop until we’d dismantled all the tiny beds and wardrobes. Some of the elves, who’ve worked with me for more than 1,000 years were heartbroken. They’d created little homes from home underneath their workbenches.

“That meant I had to create sleeping quarters for the elves and didn’t know where the money was going to come from to finance the whole thing. But then Mrs Claus read a blog about how you could hire a part-time CFO for the same amount you’d pay an office junior. She said he could help sort us out. I’d never heard such a thing but decided to try it.

Our Part-Time CFO

“Hiring our part-time CFO, Peter, was the very best thing we’ve done. Peter helped us find funding for the elves’ sleeping quarters. And he sorted out our cashflow. This is the first year, for example, that we haven’t had a cashflow crisis. Every year, we employ thousands and thousands of elves to help make presents and that’s always thrown our budget so by January, the cupboard has always been bare. Peter stepped in and helped us arrange funding and so for the first time, we’ll be able to look forward to January. No more living on baked beans in January for Mrs Claus and me, I’m happy to say.

He’s also helped us move into new markets and made sure we had all the licenses we need. And in April this year he stopped a Mr Grinch from stealing our Christmas market franchise. That was the same naughty fellow who wrote those fake news stories last year. That’s all behind us now, I’m very happy to say.

No Exit Planning

“Peter and I get on extremely well but there’s one thing we disagree on and that’s exit planning. Peter has been trying to convince me that I should start looking for a successor and thinking about an exit plan. But I don’t want to stop doing this. It’s what I was born to do. Retirement isn’t for me. Besides, Mrs Claus wouldn’t like me sitting around the house all day, making cups of tea and eating mince pies. So, Peter and I have agreed to disagree on this one matter. So, you can look forward to me popping around on December 24th for many, many years to come. Ho ho ho.”

How to Overcome the Problem of Late Payments

When your company is facing yet another cash flow crisis caused by late paying customers, it can be hard to believe there might be a solution.

But there are steps you can take to overcome the problems delinquent payments cause and to avoid them happening again.

Late payments are something that hundreds of thousands of SMEs experience. Of the 1.7 million SMEs in the UK, 640,000 say they have to wait beyond the agreed terms for payments, according to Bacs Payment Schemes.

Nearly 40% of them spend up to four hours a week chasing late payers and 12% employ someone specifically to pursue outstanding invoices.

Late payments can threaten SME’s ability to trade, and stifle appetite for growth and recruitment, says Ian Cole, Head of Invoice Finance at Siemens Financial Services. In worst cases, it can lead to insolvency. Mike Cherry, National Chairman at the Federation of Small Businesses, said if payments were made promptly, 50,000 business deaths could be avoided every year.

So too could the problems that late payments cause. Of those SMEs facing late payments, 16% struggle to pay their staff on time, while 28% of company directors reduce their own salaries to keep essential working capital inside their businesses. A quarter (25%) rely on bank overdrafts to make essential payments, and 15% find it difficult to pay business bills like energy, rates, and rent when they’re due.

Late payments take an emotional toll on business owners and CEO’s too.

Over a quarter (29%) of UK SME owners struggle with depression, anxiety, increased stress, and other serious mental health related issues caused by the worry of late payments, according to research commissioned by The Prompt Payment Directory (PPD).

The survey polled 1,000 UK small to mid-sized company owners who all suffer from poor cash flow due to late or outstanding invoice payments.

More than a third (34%) regularly lose sleep over poor cash flow caused by clients paying late and 7% even claim to have lost their hair because of the anxiety, the PPD revealed.

Nearly a quarter (21%) struggle to pay their mortgage or rent or have been forced to sell the family home. The consequence of these late payment pressures is also destroying people’s marriage, family, and social lives.

The amount of time SMEs are kept waiting beyond their previously agreed payment terms is a big issue. Almost a third of companies face delays of at least a month beyond their terms and nearly 20% are having to wait more than 60 days before being paid.

UK businesses with turnovers of under £1million wait an average of 72 days for payment of invoices, according to the Asset Based Finance Association, the body representing the asset based finance industry in the UK and the Republic of Ireland. By comparison, businesses with an annual turnover of between £1 million and £10 million wait about 53 days and businesses with £500 million-plus turnovers wait about 47 days.

Solutions

Fortunately, there are measures you can take to protect your company from the worst effects of late payments and to ensure you are paid promptly in future.

Research prospective clients

Before accepting a new client, carry out a credit check and find out if the company has a reputation for paying on time.

Agree prompt payment terms

Get clients to sign a contract or agree to terms and conditions that specify when they must pay your invoice and late or overdue fees. Include your payment terms on every invoice.

Send invoices promptly

Don’t delay in sending out invoices. Check that the details are correct to avoid delays.

Offer a range of payment options

Make it easy for customers to pay you by offering them a variety of payment options such as Direct Debit, PayPal, and credit card. If your clients are based in a different country, accept payment in their currency.

Use invoice finance

Invoice finance will give you essential working capital (90% of the approved total invoice) while you wait for the outstanding invoice to be paid. You’ll receive the remaining 10% when your client pays your invoice.

Use an invoice tracker system

You’ll receive an alert when invoices are overdue.

Keep to a schedule

Invoice on the same date every month so that your clients known when to expect your invoices.

Set up internal invoice reviews

Hold regular weekly or monthly internal finance meetings to review your invoices.

Don’t back down

If you have late fees for overdue invoices then make sure you follow through and charge them. By law, you can claim interest and debt recovery costs if another business is late paying for goods or a service.

If you haven’t already agreed when the money will be paid, the law says the payment is late after 30 days for public authorities and business transactions after either:

  • the customer gets the invoice
  • you deliver the goods or provide the service (if this is later)

You can agree a longer period for payments from one business to another—but if it’s longer than 60 days it must be fair to both businesses.

Hire a part-time CFO

For a fraction of the cost of a full-time CFO, the CFO Centre will provide you with a highly experienced senior CFO. Your part-time CFO will assess your company’s cash flow position and take the following steps:

  • Identify and address all the immediate threats to your business. It might involve chasing late paying customers, using invoice financing to give the business an immediate cash injection, or arranging short-term loans or overdraft facilities with your bank.
  • Determine where improvements and savings can be made.
  • Instigate the use of regular cash flow forecasts. This way you’ll know in advance if your company is going to face a cash shortfall and can make arrangements for extra borrowing, or take other action.

End your late payment and cash flow problems now by calling the CFO Centre today. To book your free one-to-one call with one of our part-time CFOs, call 91 9967531075 / 9867916753 or just click here.

How Your Office Shredder Is Putting Your Company At Risk

It might look innocent enough but your office shredding machine actually poses as much a threat to your business as the most virulent computer virus.

What?! How?

How could something that was bought to protect your business be as harmful as a computer Trojan?

It’s simple really: it’s not fit for purpose. Yes, it cuts your unwanted documents into thin strips. But—and this is the important bit—it leaves your company exposed to all kinds of trouble because those strips can be reassembled.

All it takes is a little bit of patience to reassemble those bits and read your documents.

Now, you might think this all sounds far-fetched, a little too James Bond/Jason Bourne for your circumstances but unfortunately, it’s not.

In fact, there’s even software that runs on Windows whose very purpose is to reassemble shredded documents.

Called ‘Unshredder’, it automates the reassembly of torn or shredded documents, thus saving ‘even novice computer users’ the tedious task of doing the job by hand.

What if those documents reveal your company’s strategic plans for the next five years? Or the details of your next big ‘secret’ project? Or the names and personal details of your customers or clients?

Even office memos can reveal valuable information in the wrong hands.

And let’s face it, people who take the trouble to reassemble shredded paper to find sensitive company information aren’t doing it for benign or charitable reasons.

No, they’re most likely doing it for nefarious purposes: to expose your company’s plans via social media or traditional media; to sell the information they find to your competitors; to blackmail your company, or to commit large-scale identity theft using your customers’ details.

The impact of your company’s secrets being revealed could be devastating, but the impact of your customers’ or clients’ details being revealed could be just as bad.

In the UK, for instance, companies that collect customers’ or clients’ personal details are legally obliged to protect those details under a law called the Data Protection Act 1998.

The same law also states that companies are legally obliged to carefully destroy customer records when they no longer need to retain them.

Not doing so results in severe penalties.

Like the £100,000 fine handed out to a local council which was found guilty of dumping the personal records of 100 people in a building it had once used as offices. The personal records were found stuffed inside 45 bags of rubbish left by the departing council employees.

So, allowing your customers’ details to fall into the wrong hands could result in your company ending up on the wrong side of the law.

And it doesn’t matter how healthy your turnover is, few companies can take a £100,000 hit to their monthly cashflow without hurting.

There’s more. If word gets out that your company doesn’t protect your customers’ details, think of the public relations implications. Who will want to risk buying from your company again?

How can you avoid this kind of disaster?

Simple, you outsource your document disposal to companies that offer paper shredding services. These companies use industrial-scale paper shredders with blades capable of transforming your documents into tiny, uneven bits of paper that can’t be reassembled.

Just as importantly, these companies will provide you with proof of destruction so that you have an audit trail, should you ever be in a position where you need it.

And as with all kinds of outsourcing, there are many other benefits too.

One, you save on overheads. You no longer need to pay for the repair, maintenance and replacement of an office shredding machine that, like a photocopier, has an unfortunate habit of breaking down when you most need it.

Two, your employees no longer need to waste time slowly feeding one document at a time into the office shredding machine. Instead, they can do the job for which they were employed.

Three, you save space. No need to allocate valuable office space for the mountain of documents that need to be fed one page at a time into your office shredder.

Four, you save money. And five, you help save the environment, because most reputable professional paper shredding services recycle what’s left of the documents they process.

So, as you see, although outsourcing has attracted its fair share of negative press in the past, it is often a force for good in a company.

It not only allows you and your employees to focus on your core competencies but saves you money and time.

Paper-shredding is just one example of what you can outsource in your business. You can in fact outsource all your technology services and business processes such as HR and finance, which allows you to operate a leaner, more efficient business and use the savings to drive growth.

Enlisting the services of an experienced part-time CFO, for example, can add value, increase efficiency and maximise opportunities in your business.

You get access to a CFO with the experience and knowledge to help you plan, manage and control business growth and who can organise both your in-house and external accounts functions.

Many business owners don’t realise the breadth of the role of a part-time CFO. For instance, a part-time CFO will not only become an unofficial ‘sounding board’ for the often-isolated CEO or owner of the business but can also help devise an efficient outsourcing strategy for the company.

If one of our part-time CFOs helps you to create an outsourcing strategy, for example, the process will include:

  • Evaluating your company’s current and future requirements.
  • Discussing a company-wide strategy/protocol for taking on outsourced providers
  • Investigating specific outsourced providers (starting with our national network of trusted providers) with proven track records
  • Evaluating providers’ core competencies to ensure they find the right match
  • Discussing cost implications in detail and uncover any hidden costs before contracting the supplier
  • Interviewing providers and ensure they will be a good cultural fit
  • Ensuring that the provider will be able to deliver the service on time and to the right standard
  • Challenging providers about their data security and integrity
  • Asking providers to share their contingency plans in the event of serious problems
  • Evaluating providers’ training programmes and ability to support your business in the event of staff sickness or absence
  • Discussing providers’ compliance policies to ensure that they will take on the responsibility (where appropriate) to adhere to laws and regulatory requirements.

And that’s just outsourcing. For a fraction of the cost of hiring a junior member of staff, our part-time CFOs will work with you to resolve all of the 12 major challenges your company is likely to face:

  1. Exit Planning
  2. Risk Assessment
  3. Implementation Timetable
  4. Strategic Funding
  5. Internal Systems
  6. Reporting
  7. Profit Improvement
  8. Cash Flow Management
  9. Compliance Reporting
  10. Tax Planning and Legal Issues
  11. Outsourcing
  12. Banking Relationship

And because it’s a part-time role, there’s no impact on your payroll or headcount.

What’s not to like?

Conclusion

So, if you want to keep your company safe, outsource your paper-shredding. And if you want to free up your time, save money and accelerate your business growth, hire a part-time CFO.

To find out more about how a part-time CFO will help your business, book a free one-to-one call with one of our part-time CFOs now by clicking here or call us on 91 9967531075 / 9867916753.

The Simple Way to Dominate Your Market

Want an easy way to outsmart your competitors and dominate your market? One that doesn’t involve an investment of time or funds in social media, Google AdWords, email marketing, SEO or any of the usual suspects.

Nor will you have to employ a swathe of graduates from Oxford, Cambridge or Harvard to carry this one out on your behalf.

It’s one that will give your organisation a distinct and profitable advantage over the majority of SMEs, no matter your industry or specialty.

So what is it?

Well, you may be surprised to discover that it’s the oh-so-humble business plan. Yes, that often derided document can indeed give your company a distinct competitive advantage over the rest of your market. (If you’d like to find out more about how to create and use an effective business plan/implementation timetable as a working document to keep your business on track to achieving your desired objectives, you can download a free report now by clicking here.)

Our experience, and just about every survey you read, shows that SMEs who have and use a business plan are consistently more successful and more profitable than those that don’t. A survey commissioned by business and finance software provider Exact, for example, found companies with a business plan were consistently more profitable (70%) than those that did not (52%).

So why don’t all SMEs have a business plan, one that details the company’s operating and financial targets, its strategic direction, and tactics? Apparently, many don’t consider it necessary. Or their entrepreneurial owners like to keep everything ‘in their head’. That’s probably fine for a start-up but fatal for a growing company.

There are so many benefits to having and using a well-constructed business plan. It will help you and your management team to:

  • Clarify objectives and develop suitable strategies
    • Understand your market
    • Identify and overcome internal and external threats
    • Seize opportunities
    • Organise the company
    • Raise external funding
    • Obtain raw materials
    • Develop new products or services
    • Generate sales
    • Comply with regulations, define job duties, etc.

There’s a catch however. While having a business plan is mission-critical, creating it can be arduous, which is probably why so few SMEs have one.

After all, thinking through objectives and likely outcomes which may occur many years down the line is, by nature, challenging. But it is the hard work up front which makes for lighter work down the road as all of our team of part-time FDs will attest to.

It’s the case that most CEOs and MDs just don’t have the time to spend on quality strategic thinking and to document and communicate that thinking in a way which allows the whole business to buy into the vision.

Likewise, they don’t have the time and specialist knowledge to manage such a business plan.

That’s unfortunate because a business plan provides CEOs, MDs and management with an ability to foresee threats and opportunities and course-correct when necessary.

Not spending quality time on strategic planning usually leads to a chaotic working environment. Opportunities get missed. Threats aren’t identified until it is too late. Small wonder that the business owners who reach out to us often talk about ‘not feeling in control’ and ‘not really knowing what is coming around the next corner’.

Business planning and getting it right brings a real sense of clarity and direction to a business – this is where an experienced FD or CFO can make a significant contribution. They can help you to create and manage a highly-effective implementation timetable.

CFOs often possess a different albeit complementary set of skills to CEOs/MDs. What’s more, they can act as devil’s advocate to ask the right questions and help to steer the company in the right direction. Meanwhile, you can get on with what you do best. This 3-minute video explains the part-time FD/CFO model in a little more detail.

Now, if you’re like many SMEs, you probably don’t have the resources or the need to employ a full-time CFO. So what can you do? You can try to manage the entire process on your own. Or, you can make it easy on yourself and your management team by hiring a part-time CFO to manage the entire process for you.

The CFO Centre will provide you with a world-class CFO with ‘big business experience’ for a fraction of the cost of a full-time CFO. It’s the business equivalent of having an Olympic coach to help your business thrive.

To get started, just book your free one-to-one call with one of our business planning experts today—just click here now.

Why Your Fear Of Seeking Funding Might Be Your Biggest Impediment To Growth

Are you so wary of debt that you won’t look for external funding to grow your company? Do you still consider the banks to be the only real source of funding?

A ‘yes’ answer to one or both of those questions is a sign that you could be hampering your company’s future growth prospects. (If you’d like to find out more about your strategic funding options, download a free report now by clicking here.)

If you are hindering your company’s growth, you’re certainly not alone. Research conducted earlier this year revealed that 78% of the 500 UK businesses surveyed by specialist mutual financial services provider Wesleyan Bank were too wary of incurring debt to seek external funding.

About three-quarters of those surveyed said they had a better understanding of traditional funding options such as bank loans and overdrafts than they did of alternative funding options such as asset finance. A national SME alternative finance survey commissioned by Nesta and the University of Cambridge found that only 9% of respondents had approached an alternative finance provider.

The so-called alternative funding market is growing rapidly, and in the UK alone has more than doubled in size year on year from £267 million in 2012 to £666 million in 2013 to £1.74 billion in 2014, according to the ‘UK Alternative Finance Industry Report’.

Sean Read, Director of Sales & Marketing at Wesleyan Bank says, “Without external finance, many SMEs are stilting their chances of prospering and fulfilling their ultimate potential.”

That’s because funding—whether through debt or equity— is often the catalyst for taking your business to the next level. Without it, you’re likely to stay where you are now or worse, stagnate.

Nowadays, there are many options for both equity and debt financing to consider. There is also the option to combine both debt and equity in a funding mix to provide the capital base for long term growth and the working capital to support working capital requirements in the business.

While there’s a vast array of options available—including some that can provide funds within days—figuring out how to access these funds can be a very time-consuming, frustrating experience, even for the most seasoned business owner.

Worryingly, the Wesleyan Bank research revealed that many SME owners turn to the internet for advice about funding options rather than speaking directly to banks or independent funding experts. While the internet does provide some accurate information, it is just as likely to offer information that at best is outdated and, at worst, wildly off-the-mark. Following such unqualified advice is likely to be disastrous for your company.

After all, raising funds is critical to your company’s future growth. As such, it should only be managed by those with substantial experience and knowledge of the strategic funding market.

Typically, that person will be an FD or CFO. And there’s the rub, for as an SME, you probably don’t have a full-time CFO with the necessary experience in fundraising to manage the process for you. So what can you do?

You can hire a very experienced part-time CFO to manage the entire process for you. He or she will manage everything from determining your immediate and long-term objectives to finding the right kind of funding partner for the business. You can watch a 3-minute video here which explains the part-time FD/CFO model.

At the CFO Centre, our CFOs have sourced more funding (over £5 billion) for our clients than just about any other company around the world. We will provide you with a world-class CFO with ‘big business experience’ to manage your strategic funding process for you and we’ll do it at a fraction of the cost of a full-time CFO. It’s the business equivalent of having an Olympic coach to help your business thrive.

To find out more about your funding options, just book your free one-to-one call with one of our strategic funding specialists—just click here now.

Warning: Without Exit Planning, You Could Be Left With Nothing

Do you dream of selling your business for a very tidy profit so you can retire and spend your days on luxury cruises or working on your golf handicap?

Well, without an exit plan, your dream may be just that, a dream that never comes to fruition.

Sell at the wrong time or without thinking about the impact of taxation, for example, and you really could be left with nothing to show for your years of hard work.

Every tax adviser that we meet agrees that without appropriate planning, business owners could pay far more tax than necessary when exiting the company. With the correct planning of your exit, at least one year ahead, preferably far sooner, you can minimize, or sometimes even eliminate both capital gains and income tax.

You may also need to consider your partners, directors and managers as incentivising them with shares or options may be a way of aligning them with your goals on the sale of your business.

That said, it’s important to realise that selling the company is not your only exit option. You can also:

  • Transfer ownership to your children
  • Sell to management
  • Take your company public by listing on the stock market
  • Liquidate the assets and take the cash that is realised

Even if your dream is to pass the company on to the next generation of your family, you still need to plan how to maximise the value of the business so they inherit something worthwhile rather than burdensome. Otherwise, you’ll be lumbering them with something closer to a millstone than a prize worth having.

The same principle applies to liquidating or publicly launching the company. Your plan should be to maximise its value and therefore maximize your options for an exit.

An exit plan allows you as the owner to remain in control of the sale (or succession) process and focus the business on the most critical value-enhancing strategies before your exit.

You might think you’re too busy right now to create an exit strategy but time really is of the essence if you want to get the business in shape to exit.

You’ll need time to develop unique sustainable selling points so you can show prospective owners that the business will enjoy continued growth, you are selling the future, not the past.

When you talk about the company’s medium and long-term prospects to potential buyers, being able to demonstrate that you’ve already made inroads into new geographical markets or new product ranges or services will help strengthen your case. That will take time which again is why you need to develop your exit strategy sooner rather than later.

Equally important is to consider the possible threats to your business which could have an impact on the attractiveness and therefore value of your business. Such threats might include an adverse change in legislation or new and competing technology in your existing markets. You and your management team need to develop a strategy to defend the business against such threats where possible and that again will take time to design and implement.

Your potential buyers will expect at least two years’ of accurate information including monthly management accounts, margin analysis and tax position before they make any sort of offer. They should then conduct extensive due diligence into all aspects of the business in order to identify potential liabilities, risks and management expertise.

Fortunately, you don’t have to do this alone. In fact, it could be an expensive false economy to undertake any of this without first consulting exit planning experts. They can help you to:

  • Explore the exit strategies that will best serve your goals for the business and yourself
  • Evaluate the business’ current value and its key value drivers
  • Compare the business’ current value with the desired sale value (for individual owners this will be the amount of capital you need to underpin your future lifestyle needs)
  • Understand the future prospects for the business
  • Identify who the business will appeal to and why
  • Identify what may make the business unappealing to potential buyers and so restrict or negatively affect exit value
  • Clarify what you and your management team need to do in the short and medium term to improve the key value drivers and minimise the unappealing aspects to potential trade buyers, institutional investors or the existing management team

If you would like to read our exit planning guide, which explains the entire exit planning process and the considerations required of an SME leading up to and during an exit, you can do so by clicking here.

If you plan to sell, your team of advisors will also help you find the right buyer, ensure the buyer has the right finance in place to pay for the transaction, optimise your net of tax cash receipt after the sale and help you to plan your new post-sale life.

Planning a profitable exit doesn’t have to cost a fortune and nor does it have to take you away from running your business day to day. A part-time FD or CFO can help with exit planning strategies and advise you on the most suitable route forward. It’s what one of our part-time CFOs did for the original owners of Kiddicare, enabling them to sell to the supermarket giant Morrisons for £70 million (at a remarkable 20x profit multiple).

With the right exit planning, you too can realise some significant personal goals, create a retirement nest egg for you and your family and secure your future. But for that to happen, you need to take action today.

To find out how you can take on one of the country’s top Chief Financial Officers, but on a part-time basis, to help get your business into shape in advance of a potential exit you can watch our 3 minute video which explains the CFO Centre service.

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