A staggering 91% of A adults in the UK reported a rise in their living costs between August and September this year, compared to the same period in 2021, providing stark evidence of the cost of living crisis. With the conflict in Ukraine rumbling on, inflation at a 40-year high and shocked financial markets, this situation will not be resolved anytime soon. More than ever, businesses need a trusted adviser. Here’s how you can help.
Qualified counsel
Regular contact with clients is vital to ensure that they have a sounding board as they take decisions that could make or break their business. Wood and Disney made it company policy to proactively contact their clients on a regular basis during the pandemic, a practice they have continued.
While the aim is ultimately to help clients with critical thought processes, the most valuable conversations haven’t always been strictly business. Director Brendon Howlett recalls: “It was an opportunity to get things off their chest during a very stressful time. Sometimes all we were doing was listening but that’s such a valuable service.”
In addition to providing personal advice, Wood and Disney make sense of the constant stream of government announcements by parsing their meaning in regular emails and social activity. In a time of endless editorialising in the press, and policy changes that could require instant action, having news and its ramifications broken down by a trusted voice is a helping hand that Howlett’s clients treasure.
Planning for turbulence
In times of fluctuating prices and consumer caution, planning is an increasingly difficult but essential part of keeping businesses in the black. So how can you ensure that clients create realistic forecasts? Carl Reader, small business expert and managing director of accountancy fi rm d&t typically sees businesses too optimistic about the number of new customers they can count on as their company grows – but foresees a different issue during this crisis. “They might overestimate the reliability of repeat customers who could have to reduce their own costs or, in the case of B2B customers, go out of business themselves,” he says. His advice is to keep a keen eye on customer churn. Reducing costs wherever possible is something all clients will be looking to do, which is where outsourcing can provide a boon.
Factotum CEO Bobby Lane has seen increasing interest in the practice recently. “I have clients coming to me saying they want to reduce their offi ce size by 50% because of rising rent costs. In some cases, 25% of that space is taken up by non- revenue raising functions such as HR or IT.”
Outsourcing such duties offers the dual benefit of reducing staffing costs and general overheads. He adds: “With home working over lockdown, people have realised they don’t need it.”
Cash is king
Businesses’ cash conversion cycle is now key and something you should be encouraging clients to focus on. “How long is it typically taking from buying stock to the sale and then converting that sale into cash?” asks Brendon Howlett. He has been encouraging people to look at payment terms and investigating if partial payment for services can be taken up front.
Credit control is always a thorny issue and Bobby Lane encourages businesses to ease this process by depersonalising it. “There’s some amazing, low-cost technology now that you can bolt onto your systems that will automate the process, sending statements, letters and reminders,” he says.
With businesses valuing existing customers more than ever, there will be understandable reticence to pass rising prices onto them, but this could be a dangerous game. “There’s a trend at the moment to almost use it as a flag-waving opportunity that you’re not raising your prices,” Carl Reader reflects.
He thinks clients could be putting themselves under unnecessary pressure by committing to such a promise. Banks currently represent a lengthy and difficult route to securing funding, which is why Wood and Disney has been forming partnerships with independent fi nance houses, something Brendon Howlett says has offered his clients as an alternative form of finance. Carl Reader advises those considering financing to make themselves more attractive by disclosing extensive accounts to Companies House that provide a narrative for lenders. He adds: “If they feel there will be a need for finance they should be speaking to lenders now, because access to funding will only get harder.”
