Expert View: Weathering the storm
It has been a challenging year for the UK economy and with the anticipation of rough waters ahead smart businesses are actively looking for ways to reduce their outgoings and protect their bottom line. Debbie Thompson, Head of Alliance & Leicester Commercial Bank’s Merseyside Business Centre offers practical advice on how to guide your business to safety. Clear your debts: Highly indebted businesses are likely to find themselves in a more vulnerable position than those with a less leveraged balance sheet. Utilise any spare cash to clear down debt.
Cash is King: For those with spare cash, now is the time to be building a nest egg. Delay any major investments that won’t produce a quick return and, instead, put any spare cash into a good value business savings account. Now is the time to shop around! Research shows that UK businesses are losing millions of pounds each year in interest by holding a poor value deposit account. In addition, many businesses can also benefit from switching their business current account, saving your business money on unnecessary bank charges.
Cut costs: A simple way to reduce costs is to review all your external partnerships. Make sure you have the most competitive providers for fee-based services such as cash handling, cash management and bill payments. Many banks over-charge for cash related services because these are not a core part of their business. They can also be punitively expensive on areas such as emergency change drawings and other ad hoc services. This is a strong area of potential savings, especially for the retail sector. Shopping around can make a significant difference to the profitability of a business and the money saved could help cover costs such as tax increases, late payments or even future expansion plans.
Make sure your bank understands your business: Many businesses depend on banks with little or no knowledge of their business. Banks should work in partnership with your business as a strong relationship with your bank can bolster a business’s defences.
In these uncertain economic times generating the best return on surplus funds is vital and businesses often remain in uncompetitive deals not realising that there are better value standalone business deposit accounts available to them. A common misconception amongst businesses is that you have to hold a current account with a provider in order to get a great rate on deposit accounts.
I would urge business owners to regularly review their finances and this is an ideal time to ensure surplus funds are working hard for your business and getting the best returns.
Debbie Thompson
