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Caught in a Company Cash Challenge?

Like many companies out there, ranging from SME’s to large long-established and venerable household names, are you and your company caught in the Cash Challenge? By cash challenge I mean are you experiencing problems with cash-flow or lack therof?

Nowadays there is a large tendency out there to focus on Profit margins and driving sales, which of course are some of the most important aspects of business practice; but there also seems to be a frightening inclination towards forgetting about company cash-flow which is a major contributing factor in the closure of hundreds if not thousands of companies every single year. This terrifying trend is particularly pertinent in today’s turbulent times.

Cash is King as nearly everyone has become so incredibly fond of telling us all these days. More correctly, Cash-Flow is the Lifeblood of EVERY single business; numerous forms of research by banks and accountancy practices have all confirmed that poor Cash-flowkills more businesses than any other single factor.

What I am about to explain might sound amazingly simple and totally unworthy of clarification, yet it is truly mind-blowing to discover just how many businesses are totally focused on producing the product/service, selling it and delivering it but who never spare much thought for the collection of the money then owed to themselved and their business. It’s important not to be under the allusion that I am only talking about small or start-up businesses because very large and long-established businesses also fall into this category from time to time when they neglect to keep a tight eye on their Debtors – many are being forced into Receivorship, Examinorship or Liquidation.

Unfortunately not every business-person fully understands the importance of cash-flow so let me try and explain what I mean by Cash-flow being the Lifeblood of every business.
You conceive an incredibly innovative or creative business idea, you open your business, you supply this phenomenal product with its endless advantages, you identify your market and proceed to sell to your customers to their satisfaction as well as your own BUT selling and receiving money or cash for goods sold are entirely different.

Your business can only possibly survive if physically collect cash for your sales as well as actually making them – €400,000 in Sales looks nice but not if only €50,000 of it has been paid for. Your Balance Sheet will look fine with a massive (and even growing) figure for Debtors, your operating capital will be used up and you will quickly run out of cash with which to pay your monthly or weekly bills such as Salaries or Wages and your own Suppliers. This means that you become the debtor or the bad guy towards your suppliers (and possibly even your staff) due to your debtors not paying you.

The traditional Irish attitude of trusting that certain businesses are completely gilt-edged and will eventually pay their debts without fail is no longer to be relied upon in today’s society. Every single business operating in Ireland today should be using every available resource to ensure that their Debtors are Minimised and their Cash balances Maximised.

I have been a hard worker from a very young age, working in a debt collection agency (All Ireland Credit Services Ltd.) every summer and school holiday for as long as I can remember; therefore I have a very strong backround in Credit Control and Debt Collection. I have completed the Irish President's Gaisce award to bronze level where I had to learn a new skill, help out in the community and help an eldery person, which I found it extremely rewarding. I am very much a people person, I was an elected member of the Student Council in school and a voluntary member of the International Society and a peer-to-peer mentoring group at university. I have studied Business Studies and French to degree level at the University of Limerick. I am currently starting up the company Credit Control Covered with my father Anthony Kelly. I hope to get the company on its feet in the next few months and get people talking about what the company has to offer - as its tutorial is extremely beneficial to anyone advancing credit in Ireland.

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  • Miriam, I don’t think we anywhere near grasp what a destructive force the fear of change is on business. Honestly the clients I struggle to deal with the most are also those that fear change the most. This is a great post, very insightful. I am looking forward to part two…..It’s about time we had your wisdom on here 🙂

  • Jackie Gowran

    My own experience of Change Management, from both sides of the equation (i.e. in my own work life & working with clients) as been reflective of the stages that Miriam has so eloquently explained. Critically my experience has been that “Change” is a part of life & is a personal experience. Experienced differently by everyone involved. It needs acknowledgment and open communication that is not often in keeping with the culture of the organisation experiencing the “Change” and so often there is the steep learning curve of improved communication behaviours also to contend with, which can bring up underlying issues that have been dormant for years.

    Change can be a struggle and have marked steps and stages, the outcome can be rewarding and allow for new growth for everyone involved, it is a process and one that needs to be approached in that way.

  • I ignored this post and filed it under ‘touchy feely’ as I thrive on change. I don’t know what made me look at it again, but I can see how it is important to pay attention to how it affects others in the business. Thanks for this.

  • Anonymous

    Thank you very much for taking the time to comment. Will be posting part II soon

  • Anonymous

    I couldn’t agree with you more Niall. And it’s that very fear that cause people to become entrenched and obstinate when it comes to changing work behaviours and practices. It takes very skilled managers to move things forward. They need specialist competencies over and above those normally included in general management development programmes. I will be outlining some of the special skills of the ‘change agent’ in part II.

  • Anonymous

    You make an excellent point Jackie. In my experience most managers get very uncomfortable when the acknowledgement and open communication that you speak of will most probably open up issues of a highly-emotional nature. They tend to be comfortable up to a certain ‘arms length’ when dealing with organisational issues and falsely think that ‘it’s better not to go there’ when opening things up involves dealing with workers’ intense feelings. Heaven forbid – someone might even begin to cry or get angry and what do you do then? It’s a sort of organisational ostrich syndrome. Much better to teach managers how to get out of their comfort zone and deal with people who are in crisis. This could save them spending months if not years struggling with protracted change programmes which are stuck because the real issues have never been dealt with and their people have become entrenched.

  • Anonymous

    Thank you very much, Aileen, for your candid feedback and very valuable insight. If you see my response to Jackie above, the very reason why many change programmes get stuck is that many managers find it easier to skip over what they see as the ‘touchy feely’ stuff. However, in the context of change programmes, the touchy-feely stuff – if not dealt with – can quickly become a deadly silent killer of change implementation. I’m very gratified that you came back for a second look.

  • Jackie Gowran

    I can only agree with Miriam’s sentiments that it can get skipped over by putting it into the “touchy feely’ category. It gets put conveniently into the denial element of our lives or put it in the “emotional box”. Perhaps it is time that “Change Management” was recognised as an emotional, developmental and challenging issue. What is so extraordinary about the ordinary element of change of being emotional?

    We are after all, human and have emotional responses to everything, especially change. It challenges our beliefs, it challenges our goals, it challenges our ethics, I could go on……… The good news is that by facing the challenge with an open mind we can grow and develop our business in ways that we did not consider possible. The added advantage is that our emotional growth benefits our personal as well as business life. Signing off ……….

  • Miriam, interestingly, I think there is a certain synergy with this post

    Pay attention to the comments 🙂

  • Good post Laura. Welcome to Bloggertone!!

  • Hi Laura, Great post! Welcome to Bloggertone, Its nice to have you on board. I really like the point you raise about the traditional Irish attitude of trusting that certain businesses pay. I think that this is something we are all guilty of to a greater or lesser degree 🙂

  • Laura Kelly

    Thanks a million for the positive feedback guys, I’m new to the whole blogging thing and to Bloggertone so it’s really encouraging to get some positive feedback, cheers 🙂

  • NP.You’re making a great start! My advice is get Networking. Blogging is about good content but it’s also about building your community.

  • Hi Ian,
    Thanks for stopping by and sharing your story.
    It is imperative that we separate the “I am free because I cannot charge people (or some other negative mantra)” from the “I am giving this free gratis, because it creates a win/win situation”.

    And we all love winners 🙂

  • Debbie

    Love this article, with this theme in mind, we started where unemployed can offer to work pro bono to prove their skills and abilities, businesses can promote their services by offering a free or discounted service! Totally agree – What comes around, goes around…

  • Hi Debbie,
    Thanks for stopping by and sharing your story with the community here.
    As long as we value ourselves as capable worthy and authentic, I don’t see a problem offering services for free to up-skill and keep busy.
    As long as it doesn’t become the norm, and as long as businesses don’t abuse this fantastic service that highly qualified and high integrity professionals can offer.

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