Posted on Oct 12, 2011 by Sandy Finlayson |
The following link may go some way towards explaining why last week’s Economist ran a leading article on the Eurozone crisis under the heading “Be Afraid”www.bloomberg.com If European Governments are now having to write IOUs to pay their creditors we really do have a problem. It reminded me of a slightly surreal conversation with a client at the top of the dotcom boom. Those of us who have been around long enough will remember the “new paradigm” when conventional wisdom went out the window and all that seemed to matter was the number of eye balls (to hit a website). The conversation went something like this:-
Client – Sandy, do you know that you can get cash from customers?
Sandy – Nonsense, you are just trying to pull my leg!
Client – That’s not all. If you give them what they want, they will give you more money!
Sandy – Nonsense, now you are really trying to wind me up.
Client – And I’ll tell you another thing. They don’t want shares for the money!
While we conducted this conversation “tongue in cheek” it illustrated the euphoric madness of the times. Nowadays I spend most of my time talking to people about their business models and financial strategy and become ever more aware of the importance of designing business models which optimise cashflow at the earliest possible date. Much can be achieved with skilful contract negotiation, for example:-
These are just a few examples of the kind of commercial issue which might be raised during a commercial negotiation. As access to Bank finance continues to be a major issue for many businesses, it is more important than ever that they are fully aware of the ways in which they can help to improve their cash-flow and make their businesses self-financing by improving their contract terms.