By Rohan Day, Partner, Armstrong Watson Skipton

AT a recent round table event for Yorkshire based Finance Directors, it was very interesting to note that the discussions struck a markedly different tone to a similar event we held with business owners and managing directors.

While the business owners were more bullish and opportunistic, the FDs they hire to manage the company purse strings were more cautious when it came to the future and short-term economic outlook. Politics aside, the reasons for such caution are obvious, but it is interesting that, whilst entrepreneurs see opportunity, accountants, in the main, see risk.

Setting the stereotype of the accountant as dull ‘straight-man’ aside, this shouldn’t be seen as a negative, as the ability to forecast effectively, predict cash flows and manage risk is what enables business owners to build and protect value, and businesses to manage their way through periods of volatility.

So what measures are finance directors taking to plan and effectively manage business risk?

Reviewing investment in major projects: This doesn’t mean shelving investments altogether, but does involve assessing the return on planned investment, reviewing funding options and carefully considering timing.

Managing cash and supplier payments: Effective credit control doesn’t happen overnight, so instilling effective behaviours in your credit control and purchase ledger teams now, is much more preferable to introducing stricter controls when you really need to.

Reviewing overhead and business processes for efficiencies: The most profitable business are lean, even in times of plenty, and the most resilient businesses are those that pro-actively and effectively manage their overhead and process efficiency on a regular basis.

Business modelling: Despite not knowing what the future might bring, all good finance directors understand their key profitability drivers and appreciate how changes to those underlying drivers can impact both profits and cash availability.

Cash flow: Often, the best time to ask for cash or additional borrowing is when you need it least. By planning for the worst and ensuring cash headroom is available, businesses can protect themselves from short term changes to trading activity and working capital.

If you’re a business owner but don’t have access to Finance Director support and would welcome a helping hand through these uncertain times please get in touch or call Rohan on 01756 620000.