The best business advice, opinion, news and expertise in Greater Manchester and further afield.

Tuesday, 5 April 2011

Leading Voice

Clive Memmott, Chief Executive of Greater Manchester Chamber of Commerce

Over the past week I have represented the Chamber at a wide range of national, regional and local meetings. The diversity of meetings I attend as Chief Executive shows how valued the Chamber is as the voice of business in Greater Manchester and beyond.

Last week I met David Frost, Director General of British Chambers of Commerce (BCC) and Philip Rutnam, Director General of Business and Skills at the Department For Business, Innovation & Skills (BIS). This was a follow-up to a previous meeting to discuss how the BCC can help BIS focus on skills and how this can support the work of the Local Enterprise Partnerships.

I was also pleased to attend the Chamber’s Oldham Local Council along with fellow Board member and Past President Peter Heginbotham OBE and welcome Craig Dean as the new Oldham President. I’d like to thank Paul Roberts for his service as President. He is a highly respected businessman and has done great work for the Chamber and the local business community in his modest but very determined way. I look forward to working with Craig Dean, who is a very young, dynamic businessman, whose Web Applications business is a great success story. These are exciting times for the Oldham Council and I want to see the influence of the Council grow.

Thursday saw me attending my first board meeting of British Chambers of Commerce (BCC) following my recent appointment to the Board. I want to play a very active part in shaping the future of the BCC and the Chamber network. We have a diverse Chamber network and I want to build on that and ensure that Greater Manchester Chamber of Commerce is at the very centre of influence.

On Monday, Chris Fletcher and I met Jon Corner, Director for MediaCityUK at the University of Salford, as this exciting development gathers pace. Each week seems to bring fresh news of MediaCityUK’s rapid growth. Last week saw history being made with the first ever live television broadcast from the brand new studio complex. This came hot on the heels of the announcement that 100 apprenticeship places would be provided at the site by BBC North. Jon and I already know each other and we’re both looking forward to working together. The university’s investment here is substantial and cutting edge. The new building is a powerful statement of the university’s ambition to be at the centre of media and digital education and development.

Yesterday I attended the national conference on Local Enterprise Partnerships (LEPs) as a speaker at one of the workshops “Realising Every Place’s Potential”. My contribution seemed to be well-received and there was real interest in how the Greater Manchester LEP is evolving and how it fits with our existing structures. We are seen as the leaders and innovators here in Greater Manchester which means we exert real influence. The conference came just days after it was announced that Chamber director Keith Johnston had been appointed as one of the private sector members of the LEP. The Chamber congratulates Keith on his appointment and will be working closely with the LEP to make sure the voice of our Greater Manchester members is heard.

The highlight of this week of course is tomorrow’s Annual Dinner. I know everyone is looking forward to hearing from our guest speaker Business Secretary Dr Vince Cable. He has agreed to take part in a Question & Answer session during the dinner which will be a unique opportunity for businesses to put their questions directly to a leading member of the Coalition Government. Prior to the dinner he will also be taking part in a Chamber round table event with a group of business leaders.

Baroness Bev Hughes, will also be hosting a table of local MPs at the dinner which will strengthen the Chamber’s links with our local politicians. Bev is playing a vital role in developing our strategy for influencing key individuals in relation to Action For Business, our policy priorities. The trick is to influence the right people at an early stage before the formal consultation process begins.

Friday, 1 April 2011

Friday Guest Blog

Paul Smith, Head of the Debt Advisory team at corporate restructuring specialists MCR

Maintain A Steady Cashflow With Invoice Discounting

Maintaining a steady cashflow is a key but difficult aspect to any successful business, especially in an economic downturn. The past few years have seen SMEs become particularly vulnerable to uneven cashflow as a result of late payments.

The Royal Bank of Scotland and NatWest have recently found that a quarter of the UK's SMEs cashflow problems are a direct result of customers paying bills between 30 and 60 days late. The figures, which were published at the end of January 2011 also outline that one in five SMEs are reported being owed on average between £50,000 and £100,000 a month in late payments.

Other figures from R3, the industry body that represents the UK insolvency practitioners, suggest that 27% of business collapses are because of another company going under, owing money.

It is clear to see how vitally important it is for any business to maintain tight credit control and debt collection processes to ensure that all owed money is paid on time. It is also increasingly essential that every business takes advantage of the solutions available to them and find what works best for them in order to help their company grow.

There are a number of ways in which most companies attempt to maintain a steady cashflow, including outlining a deadline in their payment terms and agreeing these payment terms in advance in written contracts. However, despite these procedures being put in place, it is rare that they are actually followed through with.

This puts SMEs in a difficult position as it is often the case that they don’t want to enforce late payment fees for fear they may lose important clients. Invoice discounting, a form of short term borrowing, allows a business to draw money against its sales invoices before the customer has actually paid it. To do so the business borrows a percentage of the value of its sales ledger from a finance company, effectively using the unpaid sales invoices as collateral for the borrowing.

Invoice discounting is a quick way to free up money, without changing your established credit control procedures. Unlike bank overdrafts, it’s a flexible facility that grows with your business, which may explain why bank overdrafts are in decline and invoice discounting is increasingly popular.

Invoice discounting is a potential credit route for firms struggling because of late payments. It involves selling invoices to a third party, who will provide credit and chase the debt on the businesses behalf.

With invoice discounting, the facility is confidential, and the business still retains responsibility for managing its own sales ledger, credit control and payment collection.

The advantages to this are that it gives your business an immediate injection of cash, usually within 24 hours which in turn enables you to pay your suppliers more quickly, and negotiate better terms as a result, taking full advantage of supplier discounts for early settlement.

The benefits of invoice discounting include:

• Improved cashflow: you no longer have to wait up to 90 days to get paid

• It's confidential – your customers will never know

• Up to 90% of invoice value available when you bill your customers

• The option to combine with Bad Debt Protection to minimise the risk against failing customers

• Cleared funds can be in your account the day after you raise your invoice

• You retain control over your credit control function

• Fast access to finance

Successfully maintaining a steady cashflow is increasingly difficult, especially for SMEs; the business where it is most important that they do maintain a steady cashflow. Finding the right solution for your company, ensuring that your debt management and cashflow are controlled is a business essential, which must not be overlooked.