With the festive season a distant memory, and thoughts fully
focused on the year ahead, now is the ideal time to put your
business through its paces with a financial health check-up,
according to a business banking expert at Yorkshire Bank.
Many financial experts believe 2012 could be one of the most
challenging years for business in recent history with the Gfk NOP
Consumer Confidence Barometer indicating that confidence levels
remain well below their 2005 peak as the UK continues to feel the
implications of the economic crisis.
With such a challenging period ahead, Paul Reeves, managing
partner at Yorkshire Bank's Financial Solutions Centre (FSC) in
Temple Row, Birmingham, said there are several measures businesses
should be taking to ensure a prosperous 2012.
"It has been a difficult few years for business as the
formidable shadow of the economic crisis continues to loom large,
the pressure of which has never been more apparent than at the
beginning of the year," he said.
"The traditional issues affecting first quarter business may be
felt even more acutely for many companies approaching the end of
the financing cycle.
"But while it may be a trying time, it also provides businesses
with an opportunity to take stock. It's never been more important
to make plans now for the coming year, to review your financial
position and consider future requirements."
Paul recommends a five-point financial check-up to help
businesses develop a plan which can stand up the challenges posed
by 2012.
Target your money - Focusing on turnover is vanity and cash flow
maintenance is key in a tight credit environment. As the
current business cycle draws to a close, it is important to
consider how your debt is structured. Are you getting the most out
of your current overdrafts and loans? If not, you're losing money
and tying up vital working capital in the process.
Many banks offer invoice financing or factoring services which
can dramatically improve a company's cash flow by releasing money
as soon as an order is completed and an invoice raised, rather than
having to wait for the customer to pay.
What's the plan? - Are you on top of your company
data?
Keeping an eye on your profit and loss account will allow you to
identify issues before they become problems, and developing
contingencies can mean the difference between failing and
prospering.
Consider additional funding - Ensuring the bank is up to speed
with your plans by making regular contact can provide a great
source of advice, as well as strengthening the relationship on
which swift overdraft and loan extensions or refinancing may
rely.
Re-evaluate expenses - Look at your overheads. Are you getting
the best deal on utility prices? Could you switch to a different
provider, or have you considered fuel hedging as an option?
Consider your premises. Are they being fully utilised? If not,
could you opt to move, or find additional uses to generate
income?
Do you need to reconsider company expenses? Are you getting the
best value from your company cars or could you replace them with
more efficient models or use asset finance to get a better
deal?
Look to the future - It may be a difficult time for business
now, but it pays to consider the long term. Have you considered
launching new products or expanding into different markets? When
business slows and becomes difficult it can be hard to take a long
term view but investing time and resources now may be the key to
future success.
Paul added: "The year ahead will be challenging as the pressures
of first quarter trading continue to exert themselves and the
economic crisis rumbles on, while the effect of recent events
in the Eurozone are yet to become completely apparent.
"Even the largest organisations aren't immune to the economic
realities of issues such as debt refinancing and the likelihood is
that even more big names will be affected in the future.
"Addressing the issues set out in this five point financial
check-up now, will allow you to take stock of your current position
and take action to make 2012 a successful year."