UK: Costs And Cash Flow Checklist

Last Updated: 12 September 2012

This article offers 90 tips for cutting your business costs and improving your cash flow.

Cost-cutting measures

  1. Eliminate excess and/or duplicate association dues and publication subscriptions.
  2. Sub-lease unused office space.
  3. Renegotiate your lease by asking for downward rental adjustments.
  4. Cut down on entertainment expenses. For example, have meetings in the office rather than at a restaurant.
  5. Take advantage of local seminars to reduce travel expenses.
  6. Examine your telecoms bill for billing errors.
  7. Negotiate special terms and prices with suppliers to accommodate your cash flow requirements.
  8. Sell idle assets.
  9. If you do not receive significant price reductions for bulk purchases, order inventory on an as-needed basis.
  10. Send a PDF by email instead of using a messenger or delivery service.
  11. Turn off lights when not in use.
  12. Turn down or turn off air conditioning and heating at night.
  13. Use two-sided copies instead of single-sided copies.
  14. Pay bills when due, not before.
  15. Check postage scales for accuracy.

Taxes

  1. If you paid income taxes in prior years, remember that current year losses can be carried back to generate tax refunds.
  2. If your income has decreased significantly from last year, check with your accountant to avoid over-paying estimated corporate taxes.
  3. Meet with your accountant before your fiscal year end to consider tax planning opportunities.

Track and measure

  1. Develop key ratios and key performance indicators for your business. Monitor them on a periodic basis. (See the TCii White Papers Key financial management ratios and Key performance indicators.)
  2. Develop flash reports of critical financial items and monitor them weekly.
  3. Identify profit centres by analysing monthly financial statements; consider closing down unprofitable areas.
  4. Set up and/or monitor departmental budgets.
  5. For at least several months, sign all cheques for expenses and eliminate unnecessary items.

Collections

  1. Send pre-addressed return envelopes with bills. In some cases this will expedite customer payments.
  2. Closely monitor individual customer accounts receivable balances. Contact customers immediately when their average collection period increases.
  3. Save significant collection fees by using a dunning service before sending bad debts to a collection agency.
  4. Use a collection agency or hire a collection manager to accelerate collections.

Insurance and benefits

  1. Consult your life insurance agent for ways to reduce costs of life, disability and health insurance.
  2. Consult your casualty insurance agent to reduce costs of all other insurance.
  3. Consider using non-cash bonuses such as stock options, ESOPs, etc., as employee compensation.
  4. Make use of tax-advantaged "cash or deferred" fringes to reduce payroll costs.

Credit and billing management

  1. Tighten credit policies for all customers.
  2. Take advantage of purchase discounts, even if borrowing is necessary.
  3. Check references before extending credit to a new customer.
  4. Be certain that customers understand your credit terms.
  5. Ask customers to pay by invoice rather than by statement.
  6. Consider sending out semi-monthly statements.
  7. Charge customers interest on delinquent accounts.
  8. Settle customer billing disputes promptly.

Banking

  1. Prepare monthly cash flow analysis to determine cash needs before borrowed funds are required.
  2. Secure two lines of credit at different banks, before you need the funds. Be sure to shop for rate and payback arrangements.
  3. Set up an alternative financing arrangement.
  4. Don't surprise your bankers – keep them informed in good times and bad. Send them copies of your interim financial statements.
  5. Take advantage of interest-bearing current accounts.
  6. If no other sources of financing are available, borrow against the cash surrender values of life insurance policies.
  7. Consider the use of outside investors to raise needed capital.
  8. Consolidate loans to obtain a lower interest rate.
  9. Look for ways to secure your personal assets. Do not sign for business debts personally, and never permit your spouse to sign on the obligation.
  10. Shop around for credit cards with the best processing fees and interest rates.
  11. Make deposits daily to accelerate cash inflow.
  12. Use extra cash to reduce debt.
  13. Draw on your line of credit and place proceeds in a savings account at another bank. Otherwise, the bank may cancel your line of credit if you don't use it.
  14. Consider using a night safe system at your bank to accelerate cash inflow. Caution: instruct the bank to contact you before depositing any cheques marked "Payment in Full."
  15. Keep investments liquid to accommodate short-term cash needs.

Equipment and vehicles

  1. When it's necessary to purchase equipment, use trade industry surveys that rate the equipment's performance.
  2. Cancel insurance on vehicles and equipment that are not in use.
  3. Consider leasing equipment and real estate rather than purchasing.
  4. Negotiate equipment lease terms to be paid during peak business cycles.
  5. Discourage personal use of company cars.

Vendors

  1. Prepare comparative analysis of competitors' pricing.
  2. Comparison-shop for supply prices.
  3. Get bids on any major expenditures.

Human resources

  1. Set up an employee incentive programme to generate cost reduction ideas.
  2. Eliminate employee theft by implementing adequate internal controls.
  3. Reduce your compensation to the level necessary to cover your living expenses. This shows your sincerity in tackling cash flow problems.
  4. Decide whether bonuses are justified. (Bonuses should be determined by profit or performance, and not time of year.)
  5. Limit expense authorisation to upper management.
  6. Put a freeze on hiring and salary increases.
  7. Use independent contractors instead of employees when possible.
  8. Consider using part-time employees. This reduces the amount of benefit payments.
  9. Utilise an administrative or part-time employee instead of a messenger service.
  10. Eliminate all overtime hours that don't receive prior approval.
  11. Ask managers for written plans on eliminating unnecessary expenses in their own and other departments.
  12. Discuss economic issues with staff to help motivate them to do a better job for your clients, customers and business.
  13. Set up a committee to create new cost-cutting measures and enforce existing measures.
  14. Consider reducing employees' hours rather than eliminating positions. For example, go to a six-hour day rather than an eight-hour day.
  15. Prepare a procedures manual to scale down training costs and make job transitions less costly.
  16. Reduce unnecessary meetings; use an agenda to make meetings more efficient; suspend discussion of non-agenda items; set a time limit on meetings.
  17. Cross-train staff to perform multiple functions, and combine job duties where possible.
  18. Look closely at employees to determine their productivity. Non-productive employees should be dismissed and replaced with productive personnel.
  19. Be alert to the increased number of job-seekers. Be selective and choose the best employees now.
  20. Send one person on a particular course – for example, software training –and make that person a resource to others on that subject.
  21. Consider using an automated payroll service to reduce in-house costs.

Marketing resources

  1. Understand and promote what separates you from your competition. Let staff and customers know what you do best!
  2. Evaluate the pricing of your goods and services and analyse for sensitivity to increases or decreases in prices.
  3. Consider adjusting hours of operation to meet customer demand.
  4. Investigate related products and services to identify emerging markets.
  5. Monitor the competition and related fields for their responses to the economy.
  6. Have company owners and upper management call on customers personally to identify their needs (product, service, or economic).
  7. Bundle products or services and offer them at attractive prices to stimulate sales.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

 
In association with
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

Disclaimer

Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

Registration

Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

Cookies

A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

Links

This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

Mail-A-Friend

If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

Security

This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.