The most commonly reported financial problems at this time are those below.  They do not seem that critical when you consider the recent stock market volatility but they are the essence of good management; know your situation and needs, evaluate your strategies, and ensure you have a long-term plan.

Cash Flow

Make sure you get paid and manage your cash.

- Be efficient at debt collection and managing accounts receivable

- Watch when you pay suppliers; pay on time, not necessarily early because one phones up and wants money now

- Look at the money tied up in stock and work in progress; sell excess stock, complete work faster, bill quicker

- Do weekly or monthly budgets, and monitor them often.

Rising Costs

You can reduce costs with a little effort.

- Get quotes for insurance, telephone, electricity, stationery – these are price commodities

- If you have good suppliers, ask for a better deal (price, discounts for early payment or volume)

- Check bank loans with a good broker

- Review your processes and systems for waste or lost time

- Check actual costs to the budget often; avoid impulse spending.

Regulation

Compliance can use up a lot of time and money.

- Be aware of changes in tax, corporate law, fair trading, awards.  You don't have to know everything, just that there are changes to be aware of

- Keep records up to date, it's easier to make decisions if you have relevant information

- Call the accountant before you make significant changes; it's much easier to plan with the right guidelines than clean up the mess after.

- The Tax Act is complicated, not always clearly yes or no, and there may be other matters to take into account too.

Exchange rate/Au$

This is driven by global factors, so there is no 'best' solution.

- If you are an importer, what if the Au$ drops to the low 60's to the US$ (or against the currency you deal in)

- Consider scenarios; perhaps buy goods in volume (to get a better price), manage the forward currency rate (bank), and so sell at a better price than competitors

- Watch your profit margins/cost of goods sold and increase prices to protect your margins.

Interest rates

Interest rates can move suddenly.

- Determine your needs for the next 1 or 2 years, reduce the need to borrow (manage debtors, reduce stock levels, don't borrow for personal needs)

- Look at your loans – rearrange, fixed rate/variable rate, refinance

- Consider scenarios in your budgets and forecasts, the effect on profits if rates increase, what may happen if you can't borrow at the time.

What would the grand poo-bah suggest?

- ensure you allow for uncertainty and volatility in business activity

- expect business to be subdued for at least a couple of years yet

- know what you want to achieve this year and in three years (turnover, profit, cash)

- model the Growth Drivers for your business (we will do it for you as a free service) – it shows you - where to put your efforts to get the best result

- prepare forecasts of sales, profits and cash – shows the results of your proposed plans (we can do this with you) – it highlights where the dangers lie

- run a profit improvement session, a 'how–could-we-be-better' (we do these to get you on track)

- prepare a strategy and 3 or 4 action steps  to make the plan happen the way you want (a One Page plan, only overview, not in great detail)

- ensure your accounting is up to date, compare actual and budget often, update your plan and action steps regularly

- have good financial policies, procedures and advice.