Blog Performance Staff Management

Struggling to Pay Vendors on Time? It Could Be Your Cash Flow

I hear it more and more: companies are struggling to invoice their work, reducing cash flow and making it harder to pay vendors.  

However, delay in billing for your work is not an excuse your key vendors will likely accept for very long before it impacts your relationship with them. The most common repercussion is that credit terms are converted to more immediate payment terms rather than a longer-term repayment arrangement.

Not only will this affect your cash flow, it can also greatly impact your productivity if you are unable to purchase the resources required to convert into profit.

We may try to blame our delayed revenues on outside problems but those are most often out of our control and not helpful. In our practice, we regularly see early signs of delayed revenue problems with our clients. Fortunately between our three-way cashflow forecasts and other KPIs (Key Performance Indicators) monitored on company performance scorecards, we identify these problems early enough. We are then able to guide our clients to finding solutions before the issues negatively impact cash flow and the ability to pay vendors.

One solution is to modify a client’s sales contracts to protect against project delays. Another solution is to identify a risk early enough to be able to add additional suppliers to a client’s supply chain strategy.  

In a third situation, clients identify a project management strategy as a win/win and agree to provide additional payments in advance.

The 3-Step Cash Flow Solution

  1. Use shorter-period client invoice terms
  2. Pre-plan for future vendor invoices
  3. Negotiate a pre-pay installation plan with vendors

The primary advantage of managing drops in revenue is identifying the causes early enough to be able to find solutions that avoid cash flow challenges. To do this, you should have effective company scorecards and accurate three-way cash flow forecasts. If either of these strategies is missing in your company, I suggest you talk to your business advisor or account for some further guidance. If you don’t have confidence in either of those team members, call me today and we can walk you through how to get your revenue and cash flow under control so you can maintain strong relationships with your vendors and partners.

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Blog Financial Control

Is Tax Debt Killing Your Energy & Focus?

Many business owners don’t have the processes or team to help them plan ahead for quarterly or annual tax debt. 

This results in business leaders being caught off guard without an allocated tax budget and unable to pay the amount owed.

Hidden Tax Debt

Frank*, a Better Execute client and owner of a 10-person consulting firm, suffered precisely this issue prior to working with us. His business went through a period of increased growth but he failed to account for the additional tax obligations that came with the elevated revenue and profits. The result was that this looming debt left him feeling frustrated and overwhelmed. Over time, Frank began losing his motivation and could not envisage a future without the pressure of tax debt.

After Frank was referred to us we began by analysing the problem at hand, thoroughly discussing Frank’s concerns and business position. This allowed us to identify several business solutions and assure Frank that a positive resolution was at hand. Frank later admitted that that conversation alone was enough to help him break free from the weight firmly pressing on his shoulders. 

This is important to remember if you are feeling overwhelmed: just the act of talking through your situation with someone beyond your colleagues can often be beneficial. Even if the other party doesn’t give you any strategies of their own, it can be enough for you to find clarity, so be sure to talk with someone!

Tax Debt Solutions

After our initial conversation, we worked with Frank on a brief gap analysis to see what was missing from his current team, and implement processes to allow him to move towards resolution. We soon found that he hadn’t ever learned about the need for a cashflow forecast. 

Our second objective was to begin determining a growth projection, not only to identify cash flow and budgets, but also to estimate future tax bills.

We then helped Frank negotiate a very conservative tax repayment plan so he could feel that the problem was under control, and that the solution still allowed him peace of mind, alleviating the weight of tax debt on both his business and personal life. 

As soon as this plan was put in place Frank’s stress levels seemed to vanish. He regained his energy and drive which resulted in his company growing once again. But this time we ensured it was managed in a way by which he could monitor the increasing costs and tax obligations as the revenues grew. This increased the transparency and structure of cash flow, assuring him that when the next bill arrived he would be in a far better position to manage and repay it. 

Planning For Your Future Tax Debt

If you are feeling stressed about your tax debt, it likely means you don’t have a reliable plan or strategy. Most importantly, don’t despair; I truly believe the universe will never give you a challenge you can’t handle. There are many ways to get yourself back on track and even stronger than before. The only thing you can’t afford to do is do nothing and hope the issue goes away. Take the first steps towards of action today, finding both the emotional support you need as well as the business knowledge required to develop an effective plan. 

The 3-Step Tax Debt Solution

  1. Establish a long-term tax fund
  2. Create a growth projection to forecast future debts
  3. Efficiently negotiate and manage your repayments

When you hear a solution strategy you believe in, it will feel like a weight is lifted off your shoulders, even before the debt is repaid. 

If you’d like, call us for a chat. There is no charge and you will likely start feeling better immediately.

Enjoy the process!

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