Finance for sm es ri apr 23 2015 slides only

Finance for SMEs

Stephen Hill

[email protected]

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

[email protected]