Cash, cash, cash! The 3 C’s of Enterprise Britain. It is what we lie awake about at night. It is what worries us all most.
It is absolutely true that cash is king. Companies fail when they run out of cash, not revenue or even profits. Of course one leads to the other, eventually, but cash is what it is all about. And as I pointed out in an earlier blog, we do live in an environment of corporate bullying, where the big boys beat up the little boys. The haves dine out on the have nots.
But it is even more difficult for Enterprise Britain. Not only are you paid slowly, everyone who deals with you wants to be paid in advance. Big companies do not like dealing with you, and government, whether local or national, completely ignores you as they create hurdles you have no chance of overcoming. Big companies will even come up with a holier than thou “we want to protect smaller companies against the challenges of dealing with big companies”. Hello folks! How about making it less challenging?
Now as I said before I am dealing with a company in the transport industry and the transport industry is up to its well established tradition of paying very slowly. Our funder, a factoring company, has been very patient in all fairness, but they keep the pressure on us. Pressure to start saying no to some of our bigger customers, because quite frankly they pay too slowly. Having said that, they do in fact pay – eventually. As opposed to our local authority business which has dried up – why would they support any business?
So is our factor right or wrong? Well my guess is it is a fifty fifty split and you can argue it either way. Slow payment from large bullying companies is painful, but not as painful as it was in the 90s. At least interest rates are bearable now. Does it affect our margin? Yes it does, so there the factor is right. It affects our margin largely because of the team of people we need to work on getting paid, not to mention the other team of people we need to keep our creditors at bay.
What is shocking is that our debtor level is more than 4 times our creditor level, so we are in fact funding a lot of businesses, some quite big ones. Inevitably, the larger the more difficult. I suspect many of us in Enterprise Britain are in fact forced into such a position. So I would argue we are becoming the bankers of Britain – perhaps we can reach out then for a little bailout. A couple of billion will do – we will pay it back as soon as we have paid the bonuses! Honest guv!