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THE GUILD OF MASTER CRAFTSMEN provides the public with skilled, local tradesmen you can trust.


If you see the Guild emblem you can be sure that you will be working with a trusted tradesman who is highly skilled, reliable and accountable.


01273 478449 | theguild@gmcgroup.com MARKETING


Financial habits to improve efficiency for SME’s


IN the current climate it is essential to minimise the risks and maximise cash flow to ensure business survival and growth. This will aid financial efficiency. By breaking down these challenges it is easier to identify specifics within the areas that need addressing.


Maintaining margins The cost of credit should be built into the quote whilst remaining competitive. This goes back to finding the best possible value for money with suppliers and goods as well as ensuring prompt payment.


Controlling costs Finding the best possible value for money with supplies and goods as well as ensuring prompt payment.


Managing cash flow If you prefer not to call for payment, consider outsourcing if necessary. Asking for payment should not jeopardise your relationship with your customer. If anything, it should strengthen the relationship as they will realise you intend to make your business a success.


Growing sales Sales are needed for growth. However, if your cash flow is reduced through late payments, you’ll have less working capital to utilise on further sales.


Granting credit When to offer credit to customers. Although a credit account is important it’s even more important to monitor your exposure. The startling reality is that for every £1 granted on credit, up to £5 is ‘lost’ until payment is received - this figure includes the raw materials purchased, rent and wages.


Credit costs If credit is granted and a price agreed based on the customer paying the account to 30-day terms, the supplier could start to run at a loss from as little as 35 days post invoice date. This would depend on the margin and whether the cost of credit has been incorporated into the price.


Getting paid Probably the most important consideration. If you ask for your payment others will take you seriously. You don’t need to ask for the payment when you call; ask them if they are happy with the service or tell them it’s a customer service call to check on the service you’ve provided. Ask them if they have received the invoice and is it in the correct format?


What you can do to improve efficiency? Manage and minimise risks: • Be competitive, but not at a loss to you. • Regularly check your suppliers’ competitors.


• Negotiate the best possible terms with your suppliers.


• On reciprocal relationships ensure the terms are fair.


• Shop around; don’t take the first quote. • If contracting the work out, check out the terms for your contractor.


Before granting credit: • Check the customer out using a credit report and trade references;


• Clearly define your credit terms; • Calculate the cost of offering them goods on credit;


• Make sure to get your invoicing right first time;


• Be proactive by making a courtesy call before payment is due;


• Resolve disputed debt as soon as possible; and


• Don’t be afraid of asking for payment.


If granting credit to a supplier: • Ensure that the terms are either equal or better;


• Offer to contra the accounts; • Ensure both parties are clear on what is expected, especially in the event of a query; and


• If using a 3rd party contractor, ensure they are on the same terms.


Adopting the above habits will improve financial efficiency and aid business survival.


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