finance for sm es ri apr 23 2015 slides only
TRANSCRIPT
FD4
• FD4 is a team of experienced finance directors who work on a part time basis for a number of companies in the £2m to £40m turnover range.
• They are very experienced Finance Directors who know what success looks like and have held leadership positions in companies with £100m+ turnover.
• FD4 finance directors have worked in arrange of business sectors including Consumer Goods, Logistics, Care Homes, Financial Services, Franchising, Trade Associations, Aerospace and Defence, Recruitment Services, Bio Pharmaceuticals, Digital/Gaming, Building facilities.
• The team extends to trusted partners with whom we have lasting relationships: -
Accounting Firms, Lawyers, Web & Digital Marketing professionals, IFAs, Banking and Finance Providers, Tax Advisers, Insolvency Practitioners, HR Service providers.
What is an SME?
Employees Turnover Assets
UK (Companies Act 2006)
<250 <£25.9m <£12.9m
Europe (2003/361/EC)
<250 <€50m <€43m
Generally 2 out of 3 conditions to be met
What is an SME?
Better definition?
Companies that are generally:
Smart
Motivated
Energetic
Financial challenges for SMEs
What are the CORE financial challenges that SMEs face?
Financial challenges for SMEs
What are the CORE financial challenges that SMEs face?
Cash flowOrganisationRestructuringExit planning
Cash flow
90% of small business failures are caused by poor cash flow. Dun & Bradstreet
SMEs failing due to cash flow issues - estimated that 80% of business failures were down to poor cash flow. Simply Cashflow Limited
Cash flow
What does cash flow mean for recruiters?
Invoice discounting T&Cs
Advance %
Concentration limits
Aged debt and credit control
Pay when paid clauses
Billing frequency/self bill
Cash flow
What does cash flow mean for recruiters?
Other funding arrangements
Payment terms to contractors
Perm vs Contract
Contract margin % and net profit %
Organisation
The financial aspects of organising people, processes and systems
Organisation
People
Reward schemes - short, medium and long term
Career planning and OTE
Organisation
Processes
Front office – data validation and contracts
Accounting operations - in-house vs outsource
Monthly profit reporting
Budgeting and forecasting
Organisation
Systems
Front, middle and back office
Restructuring
Changing the size and shape of the business over time
Restructuring
Growth through expansion
New team
New office
New country
Restructuring
AcquisitionsStrategic planIdentification of target/use of brokerDue diligenceExecution
Restructuring
Downsizing
Redeployment/redundancy
Exit Planning
The when and how of selling the business
Trade sale
PE involvement
MBO/MBI
Summary
• SMEs by their very nature change rapidly and this is particularly true in the recruitment sector
• Finance must be on top of these changes, balancing short term and longer term needs
• Remember the CORE financial challenges - Cash flow, Organisation, Restructuring and Exit Planning
Any questions?
Stephen Hill