Cutting Costs

Ever since the start of the Credit Crunch, I’ve noticed that people and businesses alike started to pay more attention to their outgoings. Should they not have been doing it from the outset?

Cash is king, recession or not! When times are hard, the first thing that businesses do is cut their costs. However, there seems to be a trend there on such cuts:

• Jobs
• Staff training
• Marketing

These are not the best places to start with! Instead of going into a panic mode, businesses ought to review their outgoings and how you manage your payments to understand the situation and what it means for their future survival. Look at the spending patterns.

How do you pay your suppliers? Have you got good terms with your landlord and suppliers? Do you still use the old-fashioned cheques and pay on an ad-hoc basis as of when a bill comes through? Do you pay money into your bank account when you get a cheque?

Ask yourself these questions as a starting point. Contact your suppliers to negotiate terms that would not cripple your business in the long run and ensure that you have your cashflow forecasts updated for at least three months ahead in order to show you a full short-term picture.

In order to better understand your position, talk to specialists: Business Advisor, your Accountant, Bank, solicitor for professional advice and guidance.