Tag Archive: Brexit

1. British Steel has brought UK economics back into stark focus

   June 12, 2019 11:02 am Leave a Comment

    

   Brexit continues to keep the continued poor state of the economy out of the headlines. However, the spectacular collapse of British Steel has brought economics back into stark focus with a bang.

    

   Anybody who has a measure as to financial indicators knows that the liquidation of British Steel was always on the cards. Plus it was always going to be sooner rather than later.

    

   

   Simple diligence investigations

   • Look into the parent company, Greybull’s other purchases shows numerous high profile business failures in recent years. Most notably electrical giant Comet and then Monarch Airlines. All of which ultimately cost the taxpayer a whopping £60m.

    

   • British Steels share price fell a staggering 80% over the last 14 months. An clear indication that experienced traders were pulling their money out, rather than investing in.

    

   • A review of British Steel’s accounts show a cash injection of £154m in the last financial year. Followed by a Government loan to the tune of £120m. All this demonstrates a serious miscalculation in both future trading and the accounting process.

    

   Every business owner whether at the head of large or small company, know it’s still very tough economically. So let’s be frank, it’s never been easy and it never will be. It’s how we educate, identify and manage the financial pressures that counts.

    

   Business hunches are usually correct. If you have doubts about a customer or a supplier, then there are quick and easy ways to determine whether you may have increased exposure or risk.

    

   Take the above examples about British Steel as a guide ;

   • Simple checks through Companies House and credit reference agencies will tell you who in fact is behind a company and that they may not be all that they seem.

    

   • Larger businesses with a share issue allows you to review periodic results and ratings, which can provide an indication as to whether a company is on the up or on the slide.

    

   • Most limited companies are forced to file financial accounts that are available to the public. By reviewing these, you can determine how well, or how poorly, a company is being run.

    

   British Steel isn’t the first and it certainly won’t be the last industry giant to fold. What’s important is what we learn from the failure. What indicators we use for the future and how we ensure that we’re not one of those caught up in the ripples of debt that ultimately flow down the supply chain.

    

   How can we help?

   To learn more about the benefits and costs involved in outsourcing your credit control to Corporate and Commercial please get in touch. We’re a friendly and professional team who want to help your business succeed. Email info@corpandcomm.com or Call 01535 654 594

2. The ‘B’ Word…..Brexit! Can I plan in the Uncertainty?

   January 24, 2019 1:36 pm Leave a Comment

    

   Politics!! – It affects business whether we like it or not.

    

   Many have tried to turn a blind eye (and ear) away from the ‘B word’ or Brexit!

   However, there are some key considerations to remember when it comes to supply and the subsequent credit management.

    

   In various industries there is talk of contingency measures being taken, to mitigate potential supply problems from March. One of the measures being banded about is ‘stockpiling’.

    

   Typically, this will have a greater impact on the supply of goods but service industries may experience issues too. For example if paper prices increase, this would have a bearing on printers, training companies e.t.c. having a domino effect.

    

   Now there may be some whom will live with the mantra… ‘make hay whilst the suns shines’ but we must all be aware of the risks that increased stockholding could bring and have contingency plans:

    

   Consider:

   • You’ve carefully vetted and checked your customers and have determined a credit limit that both you, ‘the Supplier’ and the client, ‘the Buyer’ are comfortable with. Should the Buyer suddenly exceed this limit, without the guarantee of a pending order to fund the increased spend, are they going to be able to clear the larger supply invoice ?

    

   • So the Buyer has a warehouse full of stock ‘just in case’ but a larger stockholding is not a pre-cursor of larger revenue. In fact, it could lead to quite the opposite. Should there not be an increased demand for items, the Buyer may be forced to sell at a lesser price, which leads to lesser revenues, a squeeze on their cash-flow and decisions as to which Suppliers to pay.

    

   • Finally let’s not forget the possible issues the Supplier may face with stockholding. The costs to any Supplier in fulfilling a larger Buyer’s order obviously increase. The question any supplier should ask is… can I afford to invest in fulfilling this new order and if so, how can I mitigate the exposure and risk of the costs for same ?

    

   There are a few key principals as to how to mitigate invoice exposure and risk, we’ve covered them previously in both our past articles and on our various website blogs such as ‘The Ten Commandments’

    

   If you want to know more, then contact our team today.

3. High street misery, Brexit…How can you manage the affect on your business?

   November 21, 2018 1:39 pm Leave a Comment

    

   

    

   Let’s make no bones about it, the next few months are a period of uncertainty for all of us.

   Brexit is finally happening!  Judging by the noises coming out of parliament, the deal is not going to be to everybody’s taste.

    

    

   The High Street is in a state of disrepair, both physically and metaphorically. A recent ……. survey claimed that inner city retail outlets were closing at a rate of 14 a day !

    

   Now more than ever is the time for you to know who you are dealing with. Also just as importantly who they are dealing with ?

    

   On face value, you may not have a direct dealing with an import or export company, or indeed that of a High Street retailer but it is imperative that you start to trace the business path.

    

   Christmas gives everybody a great opportunity to speak with your customers. Whilst you are speaking to them to wish them well for the festive season, ask them the questions that will give you the information you need to make some measured judgements.

   Examples:

    

   “I know a little bit about your business but please tell me briefly, who are your major customers,

   what type of clients are you looking to attract and are there any particular industries ?”

    

   “We were having a discussion here the other day about whether Brexit will affect us, do you think it

   will affect your business in any way ?”

    

   “What’s your thoughts on the current state of the retail industry, do you think it will

   have any bearing on businesses like your and ours ?”

    

   You’re trying to ascertain whether at some point in the future, your customers will be affected by the uncertainty to come.

   • Will Brexit impact their costs or margins ?
   • Will the reduction in High Street trade reduce their revenues and cash flow ?

    

   Remember, 8 times out of 10, a debtor is only a debtor by circumstance. Something has impacted upon their money chain. A major customer has gone bust or a supplier is delaying goods for sale. This impacts on their revenue and cash flow. Often your customer has no other choice than to pass this pain further down the money chain.  Including delaying payments to their creditors whilst they resolve things.

    

   The more informed you are about your client’s exposure and risks, the more able you are to identify changes in trading patterns and payment schedules. This will then enable you to  react faster, when taking actions to ensure your cash flow is not the one that is affected.

    

   Christmas may well be the season of good will but it must also be the season of good practice.

    

   We are here to help. So if you would like to get our advice or use our services please get in touch>>>