The business management questions from accountants Haines Watts


Advised by partner Barry Potter


Try to make realistic forecasts that take in risk management factors as well as meaningful budgets and cashflows. Sometimes, a straightforward SWOT analysis is a good starting point.


2 Does my company and its employees have a clear focus on what we are doing and what needs to be done?


1 Do we have an up-to-date business strategy for the next three years?


Things change. It’s always a good idea to regularly review your business strategy and planning and it helps maintain your focus. At the same time, you can establish if you are still on course for your target destination, whether the journey route is still appropriate and your SME has the abilities to get there. If not, what does it need?


Good communication in a business is vital. Staff are a key resource and need to be kept informed of the ambition, the ‘vision’ of the company, and how it can be achieved. Staff need to see where they fit into the business, the direction they need to pull in, and if necessary be given operational targets. The management team cannot always share everything, but it should aim to be open, embracing and empowering of its workforce. Different employees will need different levels of company knowledge and performance awareness, but all employees need a clearly communicated focus to perform well.


3 Do we have regular, accurate and timely management information covering all aspects of the business to compare with a budget?


Your business should have an efficient structured reporting system for gaining good management data, in order to make well-informed business decisions. Knowing the key core performance indicators is a basic essential, and as the company grows or takes on debt the need for more frequent reporting becomes critical. With this in mind, good managers will regularly review performance results and proactively make any necessary operational changes. They will also tackle and resolve any potential issues within the business as they arise.


4 Are we confident that we know our funding requirements for the 12-month period ahead and that we have banking facilities confirmed to meet those needs?


SMEs need to identify their business break-even points based on current


The financial questions from bankers Santander


Advised by business development director Ian Nash


1 Am I utilising the correct bank products to maximise cash within my business?


Many SMEs rely on an overdraft facility to service their short-term cash requirements but being continually overdrawn can become a slippery slope and give a false impression to potential funders. Increasingly, businesses are adopting bank products that indicate a more sophisticated approach to internal cash management. Confidential invoice discounting schemes, worked via the SME’s debtor book, can provide working capital within 24 hours. Supplier invoice finance schemes, worked in conjunction with a supportive bank, can ease supply chain cashflow difficulties and extend invoice payment terms.


2 Are my current bankers working with me to get through this economic climate?


When was the last time you saw your


bank representative? Good banks form pro-active relationships with their clients – but it is a two-way thing. Don’t be afraid to call upon the financial skills and knowledge offered by your bank to improve your SME bottom-line. Allow your funding bank to get to know and understand your business – they’ll be able to advise you better and will no doubt spot potential financial concerns before you.


3 What are the key factors required for successful expansion and trading in International markets?


Foreign exchange rates are currently favourable in many international markets, so there is an exporting opportunity for SMEs – but do you know the ‘financial language’ of those markets well enough? When abroad, use a local guide – seek out professional help. Major global banks like Santander, for example, have foreign trade finance specialists. Not only can they can provide advice on trading and cultural differences, but useful contacts and potential supply chain partners.


THE BUSINESS MAGAZINE – THAMES VALLEY – JUNE 2012


4 The current global economic and credit driven recession is changing attitudes towards financial risk management but what does this really mean for my business?


Financial confidence is in short supply, especially in some international markets, but how does this affect a UK SME? Increasingly, businesses need to be seen to be financially well run, but SMEs shouldn’t get swept away by macro- economics and media hype. The key is to focus on your own SME controllables. Maintain the right internal controls on financial risks – debtors, suppliers, weak-links in your supply chain. And get professional financial help if you need it.


5 How confident am I that my available cashflow is sufficient to meet all of the interest and capital payments on existing and future borrowing commitments?


Banks today ask far more questions and add covenants when SMEs apply


overheads, review their income and expenditure forecasts and check their cashflow projections. After taking into consideration any debt repayment obligations, the SME can then gauge how large its financial ‘buffer’ needs to be, should the business be hit by unforeseen problems or external economic factors.


5 Do we have a strong, committed and motivated management team in place covering all major areas of our business?


SMEs by definition are small and often inexperienced in certain business areas. Recognising weak points in a company is a management strength, not an admission of failure. On the other hand, being too proud to admit you need help is a management weakness and may ultimately bring problems further down the line. ‘Repair’ those weak points by gaining appropriate expertise, either through the assistance of a professional business adviser or through normal recruitment.


Ian Nash


to take out a loan. This is beneficial for both banks and businesses. It helps banks safeguard themselves against unpaid loans, but the increased checks also safeguard the viable future of the SME. Unpaid loans usually precede insolvency. A healthy cashflow is an important element for SMEs to maintain, and, while interest rates are low, fixing that future loan rate might be a sensible move.


www.businessmag.co.uk


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