2023 was a turbulent year for businesses across Northern Ireland and despite an ease in interest rates and inflation, it’s likely that 2024 will bring its own set of challenges. However, as the New Year approaches January presents an opportune time for business owners to take stock, reassess their situation and determine a financial strategy for the year ahead, according to Diane Miller, Business Debt Adviser at Advice NI.
Diane explains, “In the face of ongoing economic uncertainties, businesses need to be vigilant and proactive in managing their finances. Planning for hidden expenses, creating a detailed budget plan and keeping on top of cash flow are all crucial to sustainable financial health and can decrease your chances of getting into financial difficulty”.
Below, Diane shares her top tips to transform your business’s financial health in 2024.
Budget Planning and Forecasting
Budgeting and forecasting serve as the bedrock of a healthy business says Diane.
She explains, “A 12-week forecast looking at income versus expenditure can allow businesses to determine their net cash flow and identify hidden costs. For example, incorporating potential annual expenses such priority debts from HMRC, rates and also insurance premiums, many of which are due in the New Year.
“This practice not only enhances control over liquidity but also proves to be an effective tool for managing books and keeping track of outstanding payments and – ensuring businesses owners aren’t caught off guard by unforeseen costs – providing a comprehensive overview of financial health.”
Cash Flow Management
Diane says, “Understanding cash flow is crucial for efficient business operations. Even with a high-profit margin companies can face challenges with cash flow which can lead them to into financial difficulty. To address this, diligent credit control is essential.
“This includes regular monitoring of accounts and invoices yet to be paid. One tip to improve your credit control is always setting clear credit terms with customers – these make it easier to oversee late or missed payments and invoice quickly and accurately. It’s a great way to make your business more financially resilient and decrease your risk of accumulating debt.”
Review Your Pricing Structure
As the cost of living continues to rise, it’s critical businesses carefully review their pricing structure, adds Diane.
She says, “Balancing affordability and profitability is essential. This can include reviewing your business model which may unveil opportunities to cut back, save or reduce stock levels. The importance of adaptability and responsiveness in the current climate cannot be underestimated and by doing so, businesses can sustain their financial health and weather economic uncertainties effectively.”
Boosting Revenue
Increasing revenue is a strategic move to protect any business against unforeseen challenges, according to Diane.
Diane says, “Business owners should regularly review their suppliers and stockists, seeking cost-effective alternatives if necessary or negotiating with current suppliers to save costs. Additionally, there’s several proactive measures companies can take to protect their future, such as exploring new revenue streams and diversifying product offerings.
“If your business is struggling, please do not hesitate to get in touch with Advice NI and speak to one of our expert business advisers today. Business owners can also browse our website and Money Talks hub which offers a host of useful information such as budget planning and an energy comparison tool detailing supplier tariffs throughout Northern Ireland.”
Advice NI and the Independent Advice Network is made up of 64 members and more than 300 advisers across Northern Ireland, all providing free, impartial, and confidential advice. For business debt advice call the freephone number on 0800 915 4604 or email [email protected] where you can speak directly with an adviser between 9am and 5pm, Monday to Friday. Businesses can also access Advice NI’s live webchat on their website, open 9am to 1pm Monday to Friday.
