5 tips for effective SME cash flow management

Profitable businesses fail every year because they simply run out of cash. Stay in control, achieve healthy cash flow and grow your business with these tips.

Understanding cash flow is crucial if you want your business to survive.

Only by staying on top of the incomings and outgoings of your business can stay in control, make informed decisions and protect your business against unforeseen events, such as an unexpected tax bill from HMRC. Here are five steps to keeping your business in tip top condition by managing cash flow successfully.

Continue reading the article on http://www.smeweb.com/2017/07/03/effective-sme-cash-flow-management/

Growth slows for SMEs in construction, says federation

The SME construction sector grew in the second quarter of 2017, albeit at a slower rate than the first three months of the year, according to the Federation of Master Builders (FMB).

The FMB’s State of Trade Survey, the only quarterly assessment of the UK-wide SME construction sector, found that the period was the 17th consecutive quarter of positive growth meaning that the construction SME sector has been growing for more than four years.

Almost one in two construction SMEs predict rising workloads in the coming three months, with just nine per cent predicting a decrease in activity.

Meanwhile, 83 per cent of builders believe that material prices will rise in the next six months;

http://www.yorkshirepost.co.uk/news/growth-slows-for-smes-in-construction-says-federation-1-8665207?utm_content=57949154&utm_medium=social&utm_source=twitter 

FinTech and Artificial Intelligence

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Akoni stand
Cinthia Danove and Munal Mehta on the Akoni stand

Last week was London Fintech Week. For seven days, thousands of delegates from over 50 countries attended conferences, exhibitions, workshops, hackathons, meetups and parties. The main conference/exhibition took place at the Grange Tower Bridge Hotel, while other events occurred across the City of London, Canary Wharf and ‘Tech City’. The goal was to unite the world of fintech in the world’s financial capital and enhance the dialogue between multi-nationals, innovation firms, startups, governments, media and investors.

As innovators in the fintech sector, of course, Akoni was there!

We met people from banks including HSBC, Credit Agricole and Lloyds, and from international organisations who are interested in expanding FinTech in their home countries, such as FinTech Valley Vizag from India. We also met various investors who showed interest in the Akoni proposition and how we bring innovation to the market, and people from our data partner, Bureau Van Dijk.

As you’d expect, we also interacted with the other businesses who were exhibiting. It was a nice range of businesses, which is evidence of how broad the FinTech world is. Many were from outside the UK, including Malaysia, USA and Israel. This allowed a more enriching debate about the pros and cons of different geographies, such as regulation impact, access to capital, and government incentives. These interactions gave rise to potential synergies and opportunities to work together.

Panel discussion
Panel discussion

We attended a number of panel discussions, but of most interest to Akoni was a discussion about the impact of PSD2 from both a legal and commercial point of view. The panel comprised two tech partners from the international law firm, Pinsents Masons, a representative from RBS’ FinTech team, and the CTO of MoneyHub Enterprise. To a packed audience they raised awareness about the shift of liability from the use of API (in case of data breach), but also how banks need to do more to protect their image, and the challenge of improving communication with clients. They also highlighted the business opportunities and the incentives for banks to produce the best API.

View the official photos on Flickr: 10 July | 11 July

Exploring the hot topics of the day

The fintech world is changing remarkably fast, and there is lots to talk about.

We noticed many e-currency businesses and startups, indicated that this may be a hot space within FinTech. Another hot topic is the new technologies such as data analytics, deep machine learning and artificial intelligence (AI) that are already transforming the financial services industry. In fact, McKinsey estimate the combination of AI and robotics to be worth $50 trillion globally by 2025.

AI allows advanced behaviour-tracking, and has already enabled high-frequency trading. In future, it could allow better fraud prevention, voice-enabled e-commerce,  compliance solutions, and virtual assistants to help customers manage their personal finances.

AI will enable organisations to reduce costs and increase efficiencies while offering customers new products and services.

Akoni leverages machine learning techniques and neural nets to improve financial outcomes for businesses, by providing intelligent forecasting and automated prompting to enhance cash management.

Playing our part in events such as fintech week shows we’re at the leading edge.

Akoni helps businesses make the most of their cash. Register for free at AkoniHub.com

Business savings drop since Brexit vote, while SMEs in the East of England remain top savers

The current uncertainty in the economic and political environment following last year’s Brexit vote has had a significant impact on business savings in the country. The national average on business savings has dropped a staggering 20%. However, it seems that smaller businesses are still investing a good amount of their funds in cash savings, having only dropped 5% from last year.

The good news is that we do also see an increase in business savings in parts of the country. In the East of England SMEs have increased their savings by 9% from 2016, making them once again the top savers in the country.

SMEs understand the importance of having cash readily available for regular payments. Most of the time their cash savings will remain in a savings account that business owners and managers will have most likely chosen based on their rates and the kind of returns they can make on their money. The problem is that SMEs don’t have the time and resources to be able to shop around for the best rates on a regular basis, missing the chance to truly maximize their returns. This is where the founders of Akoni realized the need to create a service that gives SMEs the same chance as larger corporations, to maximize their returns, without having to sacrifice the time they need for running and developing their business.

As the Director of Savings at Hampshire Trust Bank, Stuart Hulme, said: “Rather than stockpiling cash in current accounts, SMEs should consider shopping around for a business savings account that provides a better rate of return, enabling them to make more of their hard-earned cash.”

For more detailed statistics read more here.

Akoni helps businesses make the most of their cash. Register for free at AkoniHub.com

 

 

Are you making these cashflow mistakes?

Banana skin

According to a recent study by a global Bank, 82% of small businesses fail because of poor cash management skills or poor understanding of cashflow. Don’t let yours be one of them!

Here are four common – and costly – cashflow mistakes. Are you making any of these?

1. Omitting to analyse your expenditure

You should review your expenses regularly, including rent, inventory, salaries and wages, taxes and debt payment. What’s right for your business will depend on what you do. For example, a local B2C business might choose to pay high rent for a prime location with high footfall, while a B2B wholesaler can save on rental costs by choosing a cheaper out-of-town location.

Benchmark your spending against competitors and other companies of a similar size and life cycle. Consider the potential return on every penny you spend, and trim any unnecessary expenditure.

Create a strategic forecast to help guide your budget. Record the amount and date of all your upcoming cash outlays. Create a separate line item for every significant cost.

Cash forecasting should be a simple activity incorporated into the monthly activities of a business and there are various tools that can assist.

2. Forgetting to focus on the money flowing in

Money in accounts receivable can be a sign of payments to come, but the money still needs to be collected. You can’t spend accounts receivable yet, so don’t treat them as profit.

Create (and follow) a process to keep on top of incoming payments:

  • Issue invoices promptly
  • Implement credit checks on all new non-cash customers
  • Collect a deposit at the point of the initial order
  • Move to payment in advance, or even cash-on-delivery, if possible
  • Track slow-paying customers and don’t delay about contacting them

Monitor ‘Collection days’ (how long you wait to get paid); ‘Inventory turnover’ (how long inventory sits on your shelf); and ‘Payment days’ (how long you wait to pay your suppliers). Negotiate faster payment terms with your clients and slower terms with your suppliers.

Be proactive about collecting late payments. Ensure the contract you have with your clients makes clear what happens when payments are delayed, such as applying a late-payment penalty or stopping work.

Cashflow advice is one of the things you get in your AkoniHub personalised report.

3. Not being realistic

The only constant is change. So don’t assume that receivables will always continue to come in at the same rate. Also, interest rates fluctuate, and payables may not be extended as far as they have been in the past.

It’s impossible to predict the future, so the best thing to do is to prepare for the worst, while hoping and working for the best.

If you find yourself heading for a sticky cashflow situation:

  • Apply for working capital before you run out of money (banks are happier to offer a loan before you need it)
  • Ask your suppliers for extended payment terms (they have a vested interest in your success)

It’s easy to find the business bank accounts with the best interest rate when you join AkoniHub.

4. Growing too fast

Remember, turnover isn’t profit, and profit isn’t cash. Your company will only survive if you generate more cash than you spend. If your outgoing expenses exceed your incoming cash, you have a cashflow problem.

The answer isn’t just selling more stuff, more quickly – because the faster you grow, the more financing you need. You will always need cash to use as working capital.

Don’t take an increase in orders as a sign to increase spending. Don’t build up inventory that you hold in stock for ages. Continue to be ‘lean’ and operate on minimal expenditure as you grow.

Plan ahead and secure appropriate financing to ensure you have sufficient working capital for peak times.

Retailers have to do major purchasing in the run up to busy seasons such as Christmas, but not all patterns are so predictable. If you’re experiencing or facing a growth spurt, remember that production costs increase at the same rate as sales. To avoid increased returns or loss of loyal customers, ensure your customer service is scaleable to cope with increased demand.

In summary

Following these tips will keep investors happy, allow you to make strategic choices, and provide you with a financial cushion in case you need it.

Akoni helps businesses make the most of their cash. Register for free at AkoniHub.com

The problem with busy-ness

Bees

Have you ever had or overheard a conversation like this?

“How are you?”
“Really busy.”
“That’s good!”

Busy-ness seems to be highly valued these days. But it’s not necessarily a good thing. In fact, it’s a scourge of our age.

Do you tweet during meetings? Check emails on your smartphone while watching TV? Find yourself texting several people at the same time as updating your social media feeds?

Multi-tasking might make you feel you’re being efficient – but switching between tasks reduces your efficiency because the human brain isn’t designed to work that way.

One theory is that it’s due to the way blood flows through the brain.

In order to think, problem-solve and create memories, the brain demands a steady supply of oxygen, glucose and nutrients via the blood. Blood helps generate new brain cells, improve communication between regions of the brain, and increase the growth of white matter. If you simultaneously activate several parts of your brain, incoming blood is distributed to the relevant areas, so reducing the volume of nutrients that can be devoted to any specific mental task.

Check the evidence

Back in 2005, Dr Glenn Wilson, psychiatrist at King’s College, London University conducted 80 clinical trials to monitor workers’ IQ throughout the day. He found that the IQ of people who were distracted by phone calls, emails and text messages could temporarily decrease by an average of 10 points (15 for men and 5 for women).

That’s a greater loss of IQ than someone smoking marijuana or missing a whole night’s sleep!

What’s more, chronic multi-taskers have increased levels of cortisol, the stress hormone, which can damage the memory region of the brain.

Sandra Bond, author of Make your Brain Smarter says: “Multi-tasking is a brain drain that exhausts the mind, zaps cognitive resources and, if left unchecked, condemns us to early mental decline and decreased sharpness.”

The brain is wired for deep and innovative thinking, but it can’t do more than one thing at a time. It toggles between one task and the next.

For example, scans show that when you talk on the phone, there is limited activation of the visual part of your brain – which is why it’s dangerous to have a phone conversation while driving (even hands-free).

The answer is focus: single-tasking, not multi-tasking

Focus may be common sense, but it may not be so easy to make a new habit. One reason is because the brain releases dopamine every time there’s an incoming ‘ping’ – this addictive neurotransmitter perpetuates the need for endless stimulation.

The good news is that it’s never too late to start single-tasking.

In a study of people aged 50 to 80 sponsored by the MetLife Mature Market Institute, the biggest predictor of sound decision-making was the ability to filter the most important information from less relevant data, and that strategic attention increases with age.

Business and busy-ness

There are times when you have to work on multiple areas at once – such as when launching a startup business like Akoni. The key is to ensure you are clear about your critical objectives, focus on delivering just one item at a time, and that you make optimal use of your time. Often, you need a well-functioning team to achieve this.

If you’re a leader, don’t let a culture of multi-tasking arise in your workplace. Do your bit by modelling best practice and your people will emulate the example you set.

Here are some tips you may find useful:

Minimise distractions so you can perform to your full potential. Turn off all notifications so you’re not interrupted. Only check your emails and voicemails once or twice a day.

Understand that ‘important’ and ‘urgent’ are not the same. Draw a four-box grid with urgent on one axis and important on the other. If a task is highly urgent AND highly important, do that first. If it’s important but not urgent, schedule a time to do it. If it’s urgent but not important, delegate the task. If it’s low on both scales, don’t do it at all.

Ensure you take regular breaks. Build in time to enjoy the simple pleasures such as family, meditation and the amazing outdoors. Fresh air is an excellent tonic to help with focus as it gives your mind the opportunity to relax while sharpening itself. Even looking out of the window for a few minutes will help to refresh you and create room for the next creative idea.

Make a ‘to do’ list, and do things sequentially. Start with the most important task and don’t do anything else until it’s finished.

Remember the story of the teacher who showed the students an empty jar. She filled it with rocks and asked “Is the jar full yet?”

“Yes,” they replied.

She then added some pebbles that settled around the rocks, and asked: “Is it full now?”

“Yes,” they replied, although less certain now.

Next, the teacher added sand to fill the gaps between the rocks and pebbles, and repeated her question.

Sure the jar was now completely full, the students said: “Yes.”

Finally, the teacher poured in a jugful of water, and filled the jar to overflowing. “Is it full now?” she asked.

“Yes,” the students confirmed.

“The moral of this story is that we all have the same number of hours in the day, and you have to fill them with the ‘big rocks’ first, otherwise there will be no room for the little things.

Follow these tips, and we hope you will eventually escape the curse of busy-ness and be able to increase your creativity and energy through focused single-tasking.

Akoni manages your cash while you focus on other important matters. Register free and set up your personalised Deposit Planner with over 300 business products at AkoniHub.com