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Focus on the Cash

Focus on the Cash
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‘Turnover is the thing because cash is king’

This particularly corny expression is very true. You can do as much business as you like, but if you never see the cash into your bank account because either you have not collected it or you have spent it before it’s got there, then you’ll never be successful. Similarly, if you do not make enough ongoing sales to pay your debts, your business is always going to struggle.

Painful Experiences

We speak from great experience in this. Before 2008 our recruitment business focused exclusively on permanent recruitment. We turned down all locum work and temporary assignments because it was too much trouble, and focused exclusively on making permanent introductions. This was fine when the markets were booming and there was plenty of work to go round, and also we were able to attract candidates and introduce them to firms. But when times got harder and the recession hit between 2008 and 2011, we suddenly found that our cash flow was down to virtually nothing. Fortunately our transcription business, www.tptranscription.co.uk, carried on and we saw cash into our group of businesses via this and also our career services, which operated selling e-books and online services with cash coming into the business regularly on a monthly basis.

Learning the Hard Way

We learnt from these times and our business is much more diversified these days, so if one area if struggling then other areas can continue to inject cash into the company.


A particular example of this is financial recruitment, where it seems that accountancy practices have been quite badly hit by the recent political turmoil in 2019, and also the increase in the use of cloud accounting services (Xero, Quickbooks etc..) which have automated a substantial number of the ongoing tasks of a bookkeeper.

Bank Accounts = Black

So the key to having a successful business in terms of cash flow is to ensure that your bank account stays well and truly in the black at all times if possible, and to avoid too much debt. Similarly you must avoid spending the money before it arrives into your bank account, and never spend anything that you do not have.

Pursue Debtors

If you experience high levels of bad debt then it is important to make sure you go after this quickly and decisively and do not let the debtor spend too much time thinking they have got away without paying you. Ensure that you have a robust debt recovery system in place and stick to it.

One of the hardest things to do with debt collection is to actually go through with any threats that you make, but it is important to do this to ensure that the debtor understands the position. If they default you will collect, and you will enforce any judgements you get as quickly as possible.

High Court Bailiffs – Very Effective

One top tip is to use the online money claims service to issue proceedings, as it is very straightforward, and if the amount owed is over £1000 to enlist the services of a High Court bailiff to make the collection for you. High Court bailiffs are considerably better and more successful at debt collection than anything linked to the County Court, who are notoriously dreadful and seem to fail to collect anything at any time.

Don’t Spend

In terms of spending money, try to avoid spending anything on services and goods you do not actually need. Take for example a new cash till and accounting system. If you run a shop that works on making sales and using a point of sale system, then try to go for something that you can afford and not something that looks amazing. It may be that you have to do a few more housekeeping duties with processing the bills and the sales, but is it really worth spending an extra £1000 on a system that may only save you a few minutes a day? Is it £1000 that you can afford?

Bottom Line

At all times think about your bottom line. Your bottom line is the cash you are keeping in your company and is keeping you going. Can you afford to take money out of the business, will the business survive, are you making enough sales and getting enough cash through the business? If you think carefully about these things and spend your money prudently then your business can be a success.