Audio Article – The Shower That Wasn’t

Podcast: Play in new window | Download (6.2MB)

Today I’m delighted to share an article about something rather wonderful that happened in the Money Gym google Mastermind Group recently to S, one of our buy-to-let investors.

Time to listen 6:44 or read the written version here >>>

[podcast]http://www.themoneygym.com/audio/2008aashowerstory.mp3[/podcast]

30 Days To Neverland (Cheque In The Post)

One of the biggest challenges facing smaller and start up businesses is the issue of when and how to ask for payment after the sale has been made.

And when and how to chase an invoice when it’s overdue is another awful dilemma to be faced with.  Most companies are started by entrepreneurs and they usually have more sales or techie skills than admin or finance chops.

Judith always says that an accountancy business was the worst for this; you do all the work, and present your invoice, which often arrives just after the bad news that the company is not doing as well as it could, or the tax bill is higher than expected or planned for.

One of my favourite bank managers once told me, when I asked him what one thing did he think I needed to know that possibly I didn’t know, that he had seen many highly profitable businesses fail due to bad cashflow management and defaulting creditors.  So I went on a hunt to find the best way to manage cashflow and that turned out to be a simple excel spreadsheet, given to me by Greg Ballard.

The Money Gym got around this issue in the very early days by making the decision to only accept customers if they pay up front (and offering an incentive for them to do so) and then we made that conversation very easy for us and our customers by putting all our payment conditions on our website – unusual for a coaching company in those days – and by only taking payment online.

But we know, from talking to our business orientated Money Gym Gold clients that sometimes that is so far outside the industry “norm” that it’s unfeasible.  Also, I’ve just been taken on by Pampers as their official wealth coach, and their PR company will not consider payment in advance of my fulfilling my new duties.  But you can bet your bottom dollar I’ll be all over my invoices like a rash especially in the early days!  I value my time too much.

One option that is often recommended is to consider a factoring or invoicing discounting company, but this is often seen as a last resort, and is not ideal, as many organisations will now not deal with them.

A different approach was brought to my attention by the excellent ezine sent out by Mike Southon, The Beermat Entrepreneur, which mentioned Cashflow Protector from the Cashew Group. Marketing Director Alan Smith says that the problem is that most sole traders and small businesses do not have the patience or skill set to chase their unpaid invoices in an organised way.

Cashflow Protector offers a web-based service enabling you to register your unpaid invoices on-line, and then for a low monthly subscription rather than a percentage of the invoice value, they will chase your invoices for you. Smith claims a 97% success rate for their customers. Cashew Group also offers legal cover to protect against the very bad payers.

You can find out more at http://www.cashewgroup.com – this is not a recommendation as we haven’t had personal experience ourselves, but it looks like a great resource for business people.  Do come back and use the comments box on this blog posting to let us know what you think, if you use them.

Your Cash – Get Control!

Nicola Cairncross recommends:  If you want to get control of your money, and discover whether you are going in the right direction financially, I highly recommend the Cashflow chapter in The Money Gym ebook (see pic on right for link).

There are two elements to good financial control;  one is to keep on top of and manage your cashflow, and the second is to take a quarterly snapshot of your assets, liabilities, income, outgoings, and overall net worth.  Both of these can be easy to do, with the right (simple) tools. 

Do not disappear up your own derrieres with details, on this one folks!  Remember what one of my first financial mentors, Gill Fielding always says, the best deals can be worked out on the back of a fag packet,and so it is with keeping control of your finances.

On the spreadsheet front, the one on P12 of the book is the old one we used to use, and it’s very good still.  But we now use a different one for our own accounts, one given to us by Greg Ballard of Passive Investments (www.AskNicolaCairncross.com/Recommends/Passive in case you don’t know them – I’m happy to take advice from someone who can take £10k on a credit card and turn it into over £30 million in property in just 10 years!!)

Read more..