Above: Pictured from left to right: Ann McGregor MBE, Chief Executive of NI Chamber of Commerce, Judith Totten, Managing Director of Keys Commercial Finance and Nigel Birney, UK Regional Director of Trade Credit Brokers.

[26 March 2013] “However big your business, cashflow is critical to survival and success” – that was one of the key messages from Northern Ireland Chamber of Commerce this morning as the Chamber in association with Keys Commercial Finance and Trade Credit Brokers Ltd hosted a master class in cashflow management for over 75 businesses at Belfast’s Radisson Blu Hotel.

The event was held by Northern Ireland Chamber of Commerce in follow up to the shock findings revealed as part of the Chamber’s Quarterly Economic survey last Quarter which revealed that almost 2 in every 5 local businesses do not have a system in place to protect their business from bad debt.

With one third of businesses believing that bad debt poses an increased risk to the stability of their business over the coming year, the cashflow master class provided practical advice for local businesses on how they can protect their business, manage internal control systems and release much needed cash into a company’s working capital.

Speaking at the event, Ann McGregor MBE, Chief Executive of Northern Ireland Chamber of Commerce said:

“Cashflow remains a real concern for businesses, indicating they are under financial pressures. Many businesses are faced with unfavourable payment terms and a lack of access to capital.

“Cashflow has been a problem for many businesses since 2008, when the downturn led to many firms being unable to access working capital. Late payment and bad debt are certainly factors that have contributed to the significant fall in business survival rates here. During this recession Northern Ireland has gone from having the highest business survival rate across the UK regions to the lowest. More businesses are now closing than opening and Northern Ireland is the only region of the UK where the business base is continuing to contract.

“A report published by the Economic Advisory Group two weeks ago refers to businesses being in either ‘survival’ or ‘stabilising’ mode and this influences their appetite for further debt and/or the types of financial products they seek.

“Government must help educate businesses on how to manage late payment and bad debt. Measures such as a kitemark for prompt payers, alongside moves to encourage local government to use e-invoicing, could mean fewer businesses struggling with cashflow problems. Alongside a better lending environment for businesses, many of whom need working capital, the creation of a state-backed business bank would also help many new and growing companies who have trouble getting access to finance at all.”

Joining Ann McGregor was Judith Totten, Managing Director of Keys Commercial Finance Limited who said:

“Debt turn in NI has deteriorated by 38 days in the last 12 months and over 80% of local businesses feel that they are potentially only one bad debt away from their own business failing. Against a back drop of these startling statistics, it is vital to instil disciplines within your business which become your bedrock for survival.

“A few simple changes such as investing in a reliable accounting system, running a quick ‘health check’ across your business’ audit trail, reviewing your terms of trade, maybe even outsourcing your credit management function and finally taking sensible steps to insure your debtor book against loss can be all it takes to improve cash flow, margins and ultimately profitability. There is no rocket science in managing cash better and no magic bullet to cure the maladies in a business but by acknowledging that you need help, asking for it and most critically acting on the advice given – your business can take its first step to transforming itself rapidly. We all need help at some point and we are learning in business – every single day.”

The Northern Ireland Chamber of Commerce Quarterly Economic Survey for Quarter 1 of 2013 comprised responses from nearly 500 businesses across Northern Ireland, and revealed that the threat posed to business stability by bad debts is a worsening problem here. Some 31% of local businesses stated that the level of bad debt in their business had increased over the last 12 months and for 16% of businesses, late payment could actually inhibit their ability to continue trading.