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Telling the story        


The aim of this part of the website is to illustrate financial issues through stories.  A cross between a regular cartoon in words, and a blog, designed to entertain, as well as to keep you thinking about things financial. 
 
The episodes come under three main headings – profit, cashflow and budgeting, and build on the things we look at in our training.  As you read them, enjoy them, but also think about how they apply to your organisation.

    These stories are designed to help you think about things financial. Enjoy them, and ask yourself how they apply to your organisation.
Foreign menus... (profit and cashflow)

I’m working in Spain this week. At the moment I’m in a café trying to work out the menu. It’s not complicated: bread; ham; cheese; and various other ingredients I can’t translate. I’m not sure exactly what I’m ordering, or in what quantity!

But how often do we treat our domestic customers as if we don’t share a common language?

If we want to be profitable, and have good cashflow, we need to communicate clearly.

We need to find out exactly what our customers want, rather than simply tell them what we provide. If we can’t provide what they want, we need to tell them. Anything else is a recipe for disaster!

Sales people tell me “Sell the benefits, not the features.”

In other words, our customers will pay a lot if we can understand and solve their problems. They’re not interested in the technical details of what we sell: they want us to make their lives easier!

And then we need to communicate our payment terms: when we’ll invoice, and when we expect to get paid. That’s one secret of good cashflow. (The other secret is to chase for payment, nit simply wait to be paid.)

That’s good financial communication when we share a common language.

Well, my food arrived, and it was more or less what I expected. And very enjoyable! Plus, when I waved my empty beer glass, it was refilled! If both parties want to do business, we can always manage to communicate!


Business basics (profit, cashflow and planning)

I went to a networking meeting trainers last week. Over lunch, I talked to someone who had just gone self-employed. “What should I be aware of at this early stage?” she asked. I had three answers.

First, watch your income.

Make sure you invoice everything you have agreed to invoice, and that nothing gets lost or forgotten, including any chargeable expenses. This means being up to date with your expenses, having good records of what work you’ve done for whom.

An additional element of watching your income is agreeing good prices with customers, and not giving everything away at cut prices.

Second, chase your bills.

Make sure you agree payment terms with customers, and don’t just agree to their terms. Don’t rely on the payment terms being on your invoice, make sure you have agreed the terms (just as you have agreed the price for the work).

Then invoice promptly, and chase the customer to make sure they pay on time. Don’t just wait for them to pay the bill (you might be waiting a long time!).

Third, spend time managing the business.

There are plenty of urgent things that need doing – the VAT return; getting the next order out; fixing the computer – but these are all short-term things. Spend some time every week working on the long-term things as well, to ensure your business remains successful.

Other people would have had different answers, but how are you applying these keys to financial success in your business?


Agreeing terms (cashflow)

I had a conversation this week with another self-employed trainer, about getting paid on time.

He made a couple of comments that illustrate general misunderstanding about agreeing payment terms.

The first was “The invoice and our website both specifically state the payment terms”.

They probably do – but there’s a problem. The payment terms on the invoice are post-contractual, so they’re not binding. The only terms that are binding are those that are agreed before the contract is signed, or before the purchase has been made. I would never dream of agreeing to do a piece of work for a client without agreeing the price, so I agree the payment terms at the same time.

His website does state his payment terms, but his client’s website probably states their payment terms with their suppliers. If they are different terms, whose terms have been agreed?

His second comment was “? I thought that if you buy in a service you accept the terms of the service.”

No. If you buy in a service from a 3rd party contractor you agree the price and payment terms with them. You never say “Charge me what you like” (at least, my clients don’t). Again, agreeing payment terms is as important as agreeing the price.

Think about buying something on the internet. You can’t complete the purchase until you have ticked the box agreeing to the seller’s T&Cs.

So – never assume a customer has agreed your payment terms. Get them to sign agreement to your terms.


The archive

Why do I need that (profit)
Getting paid (cashflow)
Little things (profit)
Reviewing financial information (profit and cashflow)
What do you want? (profit)
Motives (profit)
Let's talk (profit and cashflow)
Traffic lights (profit and cashflow)
Hedgehogs (profit)
Win the work at any cost? (profit and cashflow)
Good, better or best (profit)
Financial habits (profit and cashflow)
Terms and conditions (cashflow)
What's in your budget? (budgeting)
New year resolutions (profit and cashflow)
The toy distribution business (profit and cashflow)
Making plans (budgeting)
Job done? (cashflow)
What are we selling? (profit)
Finance in a nutshell (strategy, profit and cashflow)
What are you working on? (planning)
What are you doing today? (budgeting)
Managing costs (profit)
Paying on time (cashflow)
Consistency (profit)
Good enough (profit)
Buying loyalty (profit)
Selling books or making sales? (profit)
A different viewpoint (profit, cashflow and strategy)
Who's doing your job? (profit)
Getting paid on time (cashflow)
Business risk (profit and cashflow)
Habits (profit and cashflow)
Decision time (profit and cashflow)
Ethics?  I'm here to make money (profit)
Roast chicken (profit)
Going into care (profit)
Something's come up (profit)
What do I get for my money? (budgeting)
Watching the numbers (profit and budgeting)
Expense or investment (profit and budgeting)
Who cares what you sell? (profit)
Don't do the important things! (profit)
Biggest cause of business failure (planning)
How long is a piece of string? (cashflow)
Get a decent price (profit)
Understand your costs (profit)
What do your customers want from you? (profit)
Scrooge? (budgeting)
Weather warning (profit)
Making bread (profit)
Loyalty cards (profit)
Where are you going? (budgeting and planning)
Quilt museum folds (budgeting and forecasting)
Alexander the Great (profit)
The urgent and the important (budgeting)
Learning from experience (profit and cashflow)
The right tools for the job (profit and cashflow)
Reputation, reputation, reputation! (profit and cashflow)
Think about that discount (profit)
Growing and managing cashflow (cashflow)
Growing profitably (profit)
Selling for profit (profit)
Customer requirements (profit)
Joined up thinking (profit and cashflow)
You won't get paid until you send the invoice (cashflow)
Later (profit and cashflow)
Market day (profit and cashflow)
Who's managing the money? (profit)
Managing costs (profit)
Business growing? (profit)
Hobbits (profit and cashflow)
Isn't it obvious? (profit)
Do you have the right targets? (profit and cashflow)
Invoicing everything (profit)
Coming back for more (profit)
Being proactive (profit)
Watch where you're going (profit)
Joined up thinking (profit)
Focus (profit)
Closing the loop (profit and cashflow)
New Year thinking (profit and cashflow)
Tesco (profit)
Kitten focus (profit and cashflow)
Where's your profit? (profit)
Get the invoice right (cashflow)
Eating out (profit)
Selling and failing (profit and cashflow)
Return on Investment (profit)
Get your prices right (profit)
Protecting your cashflow
Who do you know? (profit)
But what about next year? (budgets)
Who's the customer and what do they want?
Mr B's bookshop (profit)
Drinking cider (profit)
Quality (profit)
Taking the long view (profit)
Tour de France (profit)
Getting the invoice out  (cashflow)
Getting value (profit)
What do your customers want (profit)
Miles per gallon (budgets)
How much is in stock? (cashflow)
Not enough capacity (profit)
Faffing! (profit)
Let's talk (cashflow)
Got what you need? (profit)
It's written in the stars (profit and cashflow)
Getting paid (cashflow)
Ensuring sales flow through to profit (profit)
Isn't it obvious? (profit)
Business analysis model (profit)
Covering our costs (profit)
Managing our budget costs (budget)
Cut costs or invest in the business? (profit)
Eating out of the freezer (cash)
Waste time, waste money (profit)
It's what we do that costs the money (profit)
Do we want the work (profit)
The product mix (profit)
Christmas stock (profit and cashflow)
Business information (profit and cashflow)
The cost of overheads (profit)
Business planning (profit and cashflow)
The cost of winning new customers (profit)
What are your training your sales people to sell? (profit)
Customer service (profit)
Profit & cashflow - the relationship (profit and cashflow)
Managing costs (profit)
Debt collection (3) (cashflow)
Debt collection (2) (cashflow)
Debt collection (1) (cashflow)
How much? (3) (budgeting)
How much? (2) (budgeting)
How much? (1) (budgeting)
Buying clothes (profit)
Cutting waste (budgets)
Making the sale (profit)
Where's the money? (cashflow)
So what do customers think? (profit and budgeting)
Stocking up (cashflow)
Getting paid (cashflow)
Feeding the sheep (Return on Capital Employed)
Birds, booze & fast cars (budgeting)
Office admin (budgeting)
Summer holidays (profit and budgeting)
The shopping list (profit and budgeting)
Buying baked beans (profit)
Getting the car serviced (cashflow)



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