Images_Digital_Edition_April_2019

BUSINESS DEVELOPMENT www.images-magazine.com 32 images APRIL 2019 ■ The Guardian reported in March that a number of small British firms have switched over to a four-day working week. It notes “mounting political interest that working less could deliver higher productivity and better balance between life and work“. www.guardian.co.uk ■ Making Tax Digital (MTD), the government programme that requires all firms over the VAT threshold of £85,000 to keep digital VAT business records and submit returns via MTD-compatible software, came into force on 1 April 2019. www.gov.uk When turnover is falling, what can I do to rescue my company‘s credit rating? A company credit score can often be a good indicator of which businesses you should develop relationships with. It considers a number of financial KPIs, including how prompt a business is in paying suppliers, adverse information and many more variables, depending on the credit check provider. In the UK, this figure is based on a scale of 1 to 100 and is the most commonly used metric by businesses and lenders alike to check a company’s chance of becoming insolvent before offering their services to them. A score of 50+ will show that a company is a ‘low risk’ investment. If your business is one of many suffering from declining turnover in an uncertain economy, you can ensure your credit score is affected as little as possible by following the advice below, allowing you to continue to maintain and grow business relationships. ■ Selling assets If you are considering selling business assets you want to know that this is going to have some positive impact on your credit score as well as your finances. Focus on those assets that are going to have the largest financial impact to support your falling turnover. At this stage, it’s best not to begin selling inventory in your place of work – ensure you have everything you need to continue creating your products. For industrial printers and SMEs in the textiles industry, prioritising stock and inventory crucial to continued supply chain management should be placed above all else. However, if you are reducing your service offering to accommodate for the decline in turnover, you can reconsider what is essential. For example, if certain stock lines are going to be discontinued, ensure the selling of these assets is done promptly alongside any machinery that is specific to this product line. This can be analysed through your own sales figures to create a priority-based checklist which you can work through before you desperately need to raise capital. Ensure these assets are sold with the correct tax category applied. It will be beneficial to involve an accountant at this stage to ensure everything remains compliant as well as tax efficient. ■ Invoice factoring Invoice factoring can allow you to raise a good portion of funds in a short period of time while maintaining a responsible line of credit. The process will often be made relatively simple due to invoice financiers taking over the full debtor process. They will generally provide 80-85% of the debt upfront for you to use to negate any cash flow issues. While they secure the rest of the debt owed, you can push this newfound time and money into projects and processes that are going to have bigger financial impacts. While it’s true these financiers will take their cut from this service, the time and instant income gained (usually within 48 hours) should not be overlooked. In terms of your credit score, you will then be receiving regular payments and securing funds at a crucial time, which is only going to benefit you and your business. Using invoice factoring should not affect your score negatively, but there could be implications for those that owe your business a debt. As you are showing financial foresight by using invoice factoring, it can positively affect your credit score as you are providing prudent cash management for your business. ■ Supply chain management While this may be a challenging period for your business, you need to ensure you maintain your own supply chain management. Credit scores will factor in any late payments from your business to external parties. If you’re attempting to mitigate the risk on your score, ensure you manage your supply chain effectively with prompt payments to suppliers and distributors. Expert advice on the business of running a garment decoration company Q&A Chris Robertson, is the UK CEO of Creditsafe, the global business intelligence group that specialises in business credit checking and all- round B2B solutions. www.creditsafe.com