Home > Blog > Cashflow & Finance...

Cashflow & Finance – The keys to success?

By Ian Sempers

Let’s face it, a career in accountancy or as a finance professional is not universally recognised to be the most exciting or adventurous vocation but I would argue that a good working knowledge of finance is very much a pre-requisite to building a successful company, for all entrepreneurs.

 

Most business founders start their companies with an idea of how to offer an enhanced product or service. In most circumstances, detailed financial planning is very much a secondary consideration. 

 

According to a recent American study by Preferred CFO Magazine, 82% of small business fail due to a lack of cash flow so cash (preservation) is still very much King!

 

There have, unfortunately, been plenty of examples both within our Industry and outside of it, where profitable companies have failed due to illiquidity rather than any fundamental flaw in their operations, so a good basic understanding of finance will help mitigate the risk of business failure. 

 

How the business finances its growth is a key question that should be addressed very early in the life of any organisation.

 

As an AV distribution business, cashflow and planning are especially key, as there is usually a requirement to offer trade partners sufficient levels of credit to attract their custom, whilst at the same time your manufacturer partner will require you to hold stock and pay them in full before all the inventory is sold. 

 

At Medium UK, we financed our growth through a Confidential Invoice Discounting (CID) agreement, whereby the business could draw down on 85% of the invoice value the day after the sale had been made thus providing instant cash, if required.

 

As a result, we were able to draw down cash as and when required but critically also retain control of the debtor book. 

 

We found CID a very effective debt-finance tool and it provided us with a clear framework to scale the business at a competitive rate.

 

So if anyone wants to talk about building their business, feel free to reach out to Lee, Gordon or myself at hello@re-sauce.net and we would be happy to help. Between us there isn’t much we haven’t done from building, buying and selling businesses, to floating them and going global.

RE-SAUCE_Splatter 2_Yellow.png
RE-SAUCE_Splatter 1_Red.png

Here’s what our Industry Colleagues say about us...

Peerless-AV would like to pay tribute to the incredible work Gordon and his team have done since 2009. It’s sales and brand awareness since we launched Peerless-AV EMEA in 2009 has been massive. Gordon’s strategic leadership and incredible work ethic, along with the dynamic leadership of a best-in-class team, which he assembled, has led Peerless-AV to the forefront of the AV businesses.

John Potts

Global President & CEO of Peerless-AV

RE-SAUCE_Splatter 1_Red.png
Speechmarks_01.png