Obviously, there are two sides to the cash management equation in a business i.e. money coming in and money going out. When the former exceeds the latter a business should be ok but no-one can guarantee that that will always be the case all of the time.

Taking the cash going out of the business first. Some managers believe that slowing this process down as much as possible all of the time is good practice in all circumstances. At SMS we disagree, however, neither do we believe that businesses should be profligate with their cash but a balance needs to be found and adhered to. In principle, bills should be paid on time, not late as a matter of course, to pre-agreed terms. No SME has to agree to their supplier’s terms before orders are placed but they should give them the courtesy of informing them when they are going to use alternative payment terms and ensure that the supplier understands what is going on. It saves a lot of arguments later on and helps in your own cash management.

However, when cash flow problems arise and a SME is not able to pay suppliers on time, the worst mistake they can make is to ignore the problem. Often, management find the situation embarrassing and cannot pick up the phone or ignore chase up calls from their suppliers making the situation worse. Human nature suggests that when we don’t know the actual situation we believe it is more critical than it really is and can often lead to suppliers taking aggressive, draconian action against their customers.

At SMS, we are able to deal with such problems as an independent “honest broker”, explaining the client’s position to the supplier and will work with them and the client to resolve short-term cash flow issues and endeavour to maintain good relationships between our clients and their suppliers.

As mentioned above, if the client has treated their suppliers fairly and openly in the past, you will usually find that understanding and help is more forthcoming than what you get from suppliers that have always been poorly treated.

The other side of Cash Management is also a specialist area for SMS i.e. cash collection. We will look at the credit control procedures from start to finish seeing if any improvements can be made, such as introducing credit card payments, credit checking of potential customers, debt collection systems, etc. In a similar way to dealing with suppliers, SMS are experienced debt collectors and are very successful in collecting cash from slow payers, whilst maintaining good trading relationships between our clients and their customers. If more formal action is required to collect the debts, SMS can assist with the procedures for appointing solicitors, attending the Small Claims Court, etc.