The FMB Information Department advises members on business matters and this month offers some invaluable tips for controlling your cash flow and how to bid for public sector contracts.
HOW TO IMPROVE YOUR CASH FLOW
This is one of the most challenging tasks for small businesses. However, there are several ways to keep your cash flowing to improve your accounts:
Invoice promptly – Sending out bills promptly and regularly helps ensure a steadier flow of cash into the business. Using the FMB building contracts helps you negotiate regular payments across the life of the project. You can download the FMB contracts free at www.fmb.org.uk/find-a-builder/free-contracts/
Avoid overtrading – Your business needs a balance between the work that it takes on and its capacity to do the work. Don’t continue to accept orders and try to fulfi l them if you don’t have enough cash or resources to do so.
Recover debts – Chase up any debts There are various ways of encouraging your customers to pay on time. However, there might be some cases where, despite your best efforts, some customers still pay late. If this happens, you should contact the customer in question to try and resolve the issue and review your procedures to reduce the possibility of any future late payments.
You have rights under late payment legislation to add interest and debt recovery costs onto late payments from businesses, local authorities or other public sector bodies. (These regulations do not apply to clients who are private individuals.)
You can exercise these rights at your discretion. However, purchasers cannot contract out of late payment legislation and cannot deny the supplier their right to charge statutory interest.
For further information and advice on debt recovery, contact the FMB Information Department on Tel: 0207 092 3891. Help is available for free as part of your FMB membership including writing a ‘letter before action’ to the client asking them to pay. In addition to the above, BusinessLink has introduced a new interactive tool for you to use to help you recover unpaid debts at: http://tinyurl.com/recover-debts
Control your stock – Stock control ranging from materials to finished goods could tie up your cash. Reducing your stock might help your cash flow.
Renegotiate your credit limits – Adjust payment dates and credit limits with your main suppliers.
Factoring – Sell outstanding invoices to a third party, known as a Factor. Factors pay some of the debt off in advance of collection.
Sell assets – Raise cash by selling underutilised assets and then leasing them back. However, you must sell the assets at their true price and check whether the sale will result in a profit or a loss.
You can also approach your bank to discuss the possibility of extending your finance. The Government has introduced help for businesses having difficulty accessing bank finance, via the BusinessLink financial intermediary service.
The service helps businesses review possible reasons why funding was not granted, especially if lender feedback has been limited or where the decision appears arbitrary or inconsistent.
If you are eligible for this service, BusinessLink advisers can help you to build a stronger relationship with your bank, guide you on what to do when seeking fi nance and offer support with access to other financial issues.
For further Information on this service, contact BusinessLink on Tel 0845 600 9006.
PUBLIC SECTOR CONTRACTS
Use the Contracts Finder portal for FREE searches of public sector contract notices.
A new Government website to help you identify and bid for public sector contracts has been launched to replace the supply2gov website which was limited to information on lower value public sector contracts worth below £100,000.
From 31 March 2011 the new Contracts Finder portal will have information on contracts worth over £10,000 from Central Government departments and their agencies. Local authorities are also being encouraged to publish their lower value opportunities on this service.
You will be able to search for contracts by keyword, location and minimum/maximum values. You will also be able to register for email alerts and add your business details to the supplier directory.
You will also be able to register for email alerts and add your business details to the supplier directory.
Find Government opportunities, tenders and contracts on Contracts Finder at www.contractsfinder.businesslink.gov.uk/.
The number of live opportunities available, i.e. those that are still open for bidding, will increase over time as more Government departments and agencies make more use of the service. Contracts Finder is automatically updated every weekday night with new notices published in Tenders Electronic Daily (TED), the online version of the supplement to the Offi cial Journal of the European Union (OJEU). This means you can search for higher-value opportunities as well as lower-value ones. Over the coming months, Contracts Finder will be expanded to include notices published on other procurement systems used by the public sector.
Contracts Finder covers the whole of the UK but there are additional websites that have information on public sector contracts for individual countries;
For Northern Ireland www.esourcingni.bravosolution.co.uk/web/login.shtml
For Scotland www.publiccontractsscotland.gov.uk
For Wales www.sell2wales.co.uk