Protected against cyber-attack? Excellent. Prepared for a breakdown in utility supplies? Good. Password protected to resist data breaches? Wonderful. But what if something’s threatening your business continuity at this very moment that you hadn’t even thought of? It’s all about the money.
The top ten threats to business continuity felt by companies around the world this year have one thing in common – they’re all ‘immediate’; sudden, unexpected and dramatic.
Cyber-attack is right there at the top of the list, closely followed by data breach and loss of connectivity or telephones. But what about the threat to business continuity that can creep up on companies almost unnoticed, but can be just as deadly by stealth – cash-flow.
Money is the oil that lubricates the machinery of commerce. And as we all know, without lubrication will grind to a standstill, and may be impossible to re-start.
The trouble is that unless you pay careful attention to it, cash-flow can deteriorate just a little at a time, and reserves can dwindle to dangerous levels – when that happens it may be too late to take remedial action. The secret to avoiding the cash-flow conundrum is to avoid taking your eye off it.
1. Check regularly – daily doesn’t hurt – to see that everything is in order.
2. Check that you’re being paid when you should be, and that clients aren’t using you as a source of free credit by their failure to settle your invoices promptly. Be good at money management by refusing to be embarrassed about taking about money you’re owed. The only ones who should be embarrassed about it are the non-payers.
3. Invoice quickly. If you leave invoice-writing until the month end, you could be giving clients an extra 30 days’ credit for no reason at all.
4. Don’t keep too much stock in the business. Experience will tell you what you need. Try to see the material stacked on shelves as piles of banknotes; that will focus the mind quite effectively.
5. Avoid the overdraft. It’s a very expensive way of ‘buying’ extra money.
6. Regularly review your spending on small things as well as big ticket items. You may be surprised to find that you’re spending far too much on incidental expenses without realising it – very often the case with companies with fewer than ten employees. The problem there is that being busy making sure everyone, including him or her, is looking after clients means the boss might not be looking after the business. This is when being in expense management can take a back seat. Disciplined use of money management apps can help firms to get on top of that quickly and easily.
The bottom line? Remember that you can’t have a successful business with an ailing cash-flow. Factor that in when making every business decision.