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Helping Clients Outrun the Recession
With the local economy in the
dumps, business development advisors are working with clients to tighten
up their defenses.
In addition to dispensing advice on how to better monitor cash flow and
accelerate receivables, business development advisors are helping
clients weed out bad customers, eliminate money-losing lines of
business, pare staffing levels and lock in today's ultra-low interest
rates.
Monitor Receivables for Faster Payment
Tutored by accountant Pat Costello, Lisa Skriloff has become a master at
monitoring receivables. "I try and eliminate the lag between the time my
bill reaches the client's accounting department and the time the check
is cut," says Skriloff, president of Multicultural Marketing Resources
Inc. in Manhattan.
Leaving nothing to chance, she calls the client's accounting department
to make sure her bill has arrived, the president to see if he or she has
signed off on it, then the accounting department again to ask when the
check will be cut. She has even talked many of her retainer clients into
authorizing automatic payment of her bills.
"Don't give customers the opportunity to make excuses, such as ‘We
didn't receive the invoice’ or ‘There was a problem with some of the
merchandise,’ " says Justine DeVito Tenney, a small business specialist.
She suggests her clients use bank services such as lock boxes to get
funds into their accounts more quickly. And sometimes it's cheaper to
accept credit cards than it is to chase receivables or bad debts, she
says.
Lock in a Line of Credit to Boost Confidence
Even though Deborah Wainstein didn't need it at the time, her accountant
insisted last year that she get a line of credit for her Manhattan
employment agency.
"Her expenses were low, and her cash flow was still good," says
Wainstein's accountant, Anita Katzen. With that credit line, Wainstein
would get a bit of a cushion that would cost her nothing until she
actually needed to draw on it.
This year, with many of Wainstein's competitors struggling to keep the
doors open, that credit line has helped her company, Priority Staffing
Solutions Inc., not just to survive but to thrive. Although she has not
tapped into it, just having the credit line has given Wainstein the
confidence to make a major push, adding employees, buying software and
producing new marketing materials.
Check Creditworthiness of New Customers
Chuck Ludmer is cautioning his clients to pay close attention to the
creditworthiness of new customers. Running credit checks on new
customers is a must, and increasingly he's advising clients to buy
credit insurance to protect against losses.
Analyze Cost Data to Preserve Margins
Many accountants are helping clients bring their profit margins up to
industry standards by analyzing their sales costs more closely. Many
small businesses aren't used to generating the kind of data that
exercise requires, but the payoff can be well worth the added effort.
After carefully studying sales costs for a manufacturing client, for
example, Mike Gould, advised him to hire more employees so that his
factory could run double shifts. "Doing that instead of paying overtime
cut their (payroll) costs by 30 percent," Gould says.
Outsource, but Consider Each Case Individually
Outsourcing, a perennial cost-cutting favorite, can generate major
savings but must be approached on a case-by-case basis. Gould has
counseled several local clients in the importing business to outsource
everything from warehousing and shipping to order processing and
billing. "They pay a fixed percentage of sales, which allows them to fix
and lower those costs," he says.
Others, though, warn that outsourcing has its limits. "There's a point
at which it becomes cost-inefficient," cautions Joel Gensler. He points
out that the cost of paying an accounting firm by the hour can sometimes
outstrip the cost of keeping a bookkeeper on staff.
Copyright 2002, Crain Communications, Inc
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