Matrix Consultancy

Have you got the basics right?

Here’s a checklist.....

• Focus on cashflow: this is the lifeblood of a business and is more important than sales or profits. Closely track cashflow and payments (in and out) and be vigilant for early signs of late payments.
• Check your terms of trade: what are your payment terms? Are you able to charge for late payment? Under what circumstances can the contract be cancelled – by you or your counterparty? Many companies are reviewing their existing contracts and asking their solicitors to tighten new contracts.
• Deal with bad debts: know your customer before you trade with them. Check they are a good risk – look at financial details at Companies House or take out a credit reference. Set a clear limit for each customer and consider taking for credit insurance for some customers. Be on the watch for warning signs.
• Spread your risk: Don’t be over reliant on just a few customers or suppliers. Identify your most profitable customers and continue to provide excellent service. Think carefully about taking on new customers.
• Review your cost base: always consider how costs might be cut. It’s quite difficult to achieve a realistic balance between being too gentle and being quite savage.
• Keep your bank and finance facilities under review: make sure you have sufficient capacity of working capital over your immediate needs. The banks are encouraging businesses to keep them fully informed to avoid any surprises. We think that this advice should be treated with caution as, to be cynical, it may give them the early warning they need to reduce or withdraw the facility.

Top Tips:

Assess your position realistically

Discuss it with your fellow directors and senior management

Communicate with your staff

Monitor your position and take timely remedial action