CRN Finance Forum - Blueprint for Survival and Growth

  

CRN Finance Forum - Financial strategies to ensure business survival

Following on from the TCA's Channel Finance Forum in 2009, in June CRN hosted its Finance Forum 2010, a half-day seminar aiming to help resellers put in place strategies to ensure business survival through these "interesting" times. Hosted by channel finance guru Nitin Joshi, founder of Channel Money, the audience heard wide ranging and insightful presentations that between them offer a blueprint for survival and growth.

TCA Members are reminded that many of the essentials mentioned below are one way or another available as a part of their membership, eg financial  and legal advice, in particular asset recovery and guidance in the preparation of client contracts and the checking of your terms and conditions. More details in the TCA Members' Area  

Alison Hopkinson - Regional Director, The FD Centre

  • Banks, by and large, haven't been putting companies into liquidation
  • Insolvency practitioners have been promoting it as a way out of problems
  • Businesses with 5-100 employees have been most impacted
  • Available credit remains very tight
  • Alastair Darling said that £94bn would be available, but banks are unwilling to take the risk and actually lend it
  • Businesses are seeking a wider range of sources and types of finance
  • UK's last expansion was fuelled by increased credit
  • 160,000 companies are currently experiencing "critical financial distress"
  • Large companies are putting the FD in charge

Alison's Top Tips

1) Understand your profit and cash drivers

  1. Understand utilisation rate of key staff
  2. Identify late payers
  3. Don?t be afraid to make strategic decisions

2) Know and track your kpi's

  1. Identify and unlock
  2. Track
  3. Measure
  4. Focus

3) Go variable

  1. Understand which are fixed costs and which are variable
  2. Put in place employee share schemes
  3. Lease / rent instead of own
  4. Get good SLA?s and outsource your staff

4) Smarten up your processes

  1. Security: finance directrs/ controllers have been known to walk away with assets
  2. Put clients onto direct debits
  3. Get cash up front if possible
  4. Historical numbers are useless in the current environment
  5. Credit line / credit control are no longer an ?admin? function, must be a management function
  6. The more you can decrease your reliance on debt the stronger you are

5) Communicate with key players

  1. Staff (take them on your journey with you)
  2. Suppliers
  3. Banks
  4. Customers (use different touches for different levels)

Mark Ancell - General Manager Credit Services, C2000

  • Credit isn't luck or really a science, it has to be a key business strategy
  • Key elements: timelines, open communications, flexibility, relationships, engagement, creativity
  • Maintain a clean account with prompt notification of "issues"
  • Credit departments have to be flexible
  • Manage your risk
  • bring the distie into the deal
  • Take credit reports from reference agencies
  • Understand your customers financials
  • Pre-packaged administration is a process that is currently being abused
  • Be careful about unusual orders
  • Be wary of identify fraud, yours or your customers (request copies of utility bills, bank statements etc)
  • C2Ks End User Finance Scheme will shortly launch
  • Credit Elevator Scheme aims to take resellers from £5k credit limit to £300k

Christopher Harlowe - Partner, Speechly Bircham

  • Ensure you are working within a watertight legal framework so that if your customer has a receiver appointed you retain clear title to your goods.
  • Build protection into your new contracts: security, guarantees, retention of title
  • You must take positive action to ensure you retain title (it isn't automatic)
  • Your Ts & Cs should require goods be segregated until paid for
  • You should have entitlement to enter premises
  • You should have right to cancel the contract unless paid in full
  • If bills are unpaid then retain right to suspend future supplies and all debts become due

Help your cause by: marking your goods, requiring stock segregations, use your right to enter premises and inspect stock (it is still yours until paid for in full), make sure you terminate the contract (you might still be liable to supply under contract even if they haven't paid outstanding bills)

There are legal remedies against an administrator who sells goods that are subject to a Retention of Title. But you must act promptly to state your title retention & identify the goods. Tel the administrator that you have title and will make claim against them for the goods ?under conversion?. Put it in writing and ?terminate the right to sell? Administrators are personally liable if the sell goods unlawfully.

Pete Davies - Country Manager, Atradius

  • Communicate! It is the best way to deal with things when they go wrong
  • In the UK about 15,000 companies use credit insurance as part of their credit strategy
  • At the peak of the global economy UK credit insurers had œ300Bn exposure on UK and overseas buyers
  • Paid claims:  2007 £132m; 2008 £64m; 2009 £320m

David Smith - Chief Executive, Global Futures and Foresight

Recessions are inflexion points where nothing will be the same after

Strategies for the future:

  • Do nothing (cheap but risky)
  • Become infinitely agile
  • Have foresight and place your bets
  • Reduce risk and exploit the (inevitable) change
  • Step up innovation in order to win market share: "The winners will be companies who know how to identify opportunities in the downturn".
  • "Don?t ask consumers what they want. They don?t know. Apply your professional skill to identify what they need. Then sell it to them"
  • How can we put apps out there that bring customers to us?
  • Develop networks of people who will give you ideas for nothing

"If things seem under control you?re probably not going fast enough"

©TCA2010