Written by Michael Facey, head of marketing and product management, OnGuard
IT has certainly been a tumultuous few weeks since the UK voted to leave the European Union.
Whichever side you were on, there’s no denying that the fallout from the referendum has been dramatic. The value of the pound plummeted and Theresa May replaced David Cameron as prime minister. With so much uncertainty around trade deals, single markets and the falling pound, it’s understandable that businesses are concerned about the future. However, all is not lost, and businesses can still be masters of their own destiny if they focus on what matters – cash flow.
Taking back control
In the run-up to the referendum, the Leave campaign continually used the #TakeBackControl hashtag to promote its message.
Now that the vote is over, however, control seems more difficult than ever. Exchange rates, GDP figures and national productivity are all issues that can have a big impact on companies.
Unfortunately, individuals can do little about these macro issues. Instead, it’s best to focus efforts on the things that can be controlled – like cash flow.
The importance of cash flow
In times of change, a resilient cash flow can reduce uncertainty – after all, businesses need money to keep operating.
While a long list of sales and positive revenue may look good, it doesn’t mean anything if customers aren’t making payments. Revenue is merely vanity, profit is sanity, and cash flow the reality that really needs attention.
Although many businesses continue to trade when they are making a loss, it’s simply not sustainable. Delaying payments to your own creditors can, in the long run, cause cash flow problems that can be terminal for a business.
But by getting cash flow right, you’ll be able to bring certainty to your business, unlock working capital and help to ensure that you can survive any potential turmoil.
If you want to ensure good cash flow, here is what you can do:
- Be flexible
From both sides of the Brexit debate, we have been consistently told to remain positive post-referendum. This is due to the UK’s ability to adapt and be flexible in the face of difficulty.
This isn’t just talking about the macro economy as a whole, but also the resilience of individual businesses. Flexibility requires problems to be recognised and addressed quickly. Solid reporting and analysis capabilities can help you to identify issues sooner rather than later, allowing you to adjust processes, invest in new tools or amend policies as required.
- Have a plan
Having a clear picture is also vital; advice that resonates from governments and banks through to the private sector – enterprise to small business.
What makes a good plan? It should fit the business’ need, be realistic and specific, defining responsibilities for implementation. In addition, a plan should motivate the team and include plenty of follow-up analysis so that adjustments can be made.
- Use the right tools
For credit management teams, effective and function-rich software can make a huge difference in how quickly payments are received.
Software must automate processes and create full audit trails to create a more efficient, intelligent and successful team. Credit managers benefit from powerful analysis tools, and the insight it provides can simplify complicated accounts.
- Boost communication
Strong communication, both inside the organisation and with customers, is always important, whether there’s a Brexit focus or not.
Take steps to ensure your systems and processes allow an efficient flow of information and assist with building transparency – that way you can avoid surprises and ensure everyone knows what’s expected.
Looking forward, there will be plenty of challenges to deal with, as the results of the referendum continue to take effect. There will be political changes, negotiations with Europe and new laws.
But whatever happens, businesses that are able to maintain control of their cash flow will survive where others may falter as post-Brexit Britain looms large on the horizon.