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Why is cash flow even an issue?

We’ve all heard the quote “turnover is vanity, profit is sanity, and cash is always king”…

We understand that turnover is the level of sales our business makes, we also understand that some things we sell make more money than others and that it is never a good idea to sell something at less than it costs to provide.

But do we really understand what cash flow is and how to use it to benefit the growth of your business?

In essence, good cash flow is securing the profit you have made on the Companies turnover as soon as possible and paying for the inputs, that were required to make that sale, on time. Inputs could be the simple cost of an item, distribution costs plus administrative overhead. Or they could be more complex, say in a situation where a process is used that has many inputs at every stage in the process.

Paying for the inputs

If you need to pay for the inputs before you receive the actual cash you will need to find a solution to cover the cash costs. Cash is therefore separate from the accounting profit.

If you are producing a product over a number of months (like a house for example) there will be many costs that need to be paid for to end up with a finished house that can be sold. From an accounting perspective these costs will be deducted from the sales price to arrive at a profit when it is sold. But until it is sold cash is going out of the business and is being recorded as ‘work in process’ or ‘stock’ as an asset on the balance sheet. This is just an accounting way of carrying forward costs to allocate them to the sales value in the future accounting period, but this has no resemblance to the cash reality of what is going on.

It probably goes without saying that the best cash flow you can get is to receive the funds up front.

There are many ways to ensure this happens and in businesses that serve the consumer it is the norm.

However, further down the supply chain there are many more businesses that add value to a finished product or service. The norm here is to offer trade credit terms allowing time for a customer to pay for the good or service provided.

The use of credit

The use of credit allows for faster delivery of the good or service as invoicing and payment are not required beforehand. It has sparked many industries – credit control, credit reference agencies, debt collection, trade credit insurance, invoice finance, to name a few.

With the ability of customers to pay late or go out of business before the payment is made to you it is no wonder that this availability of credit is a cause for much consternation. In the UK many businesses are regularly paid late – this is the same for those involved in public and private supply chains.

Late payments

Late payment is more normal than payment on time. This has an inevitable knock-on effect that means Companies paid late cannot pay their supplier commitments and so on down the line. The first step in good cash flow is rarely adhered to.

Even in industries that supply to end consumer businesses (such as supermarkets and cafes) that take payment from their customer on the day the goods are sold, credit is given to them by their suppliers. This credit allows the retailer to stock their shelves with unpaid products in the hope that these get sold before the payment is due to be made to the supplier. If they don’t, this can have a negative impact on cash flow as they will still be required to pay for them.

Trade credit

With trade credit a necessity for the smooth operation of business, it is those businesses that manage their cash flow well that will have excess cash available to take advantage of new opportunities.

In business there are many phases but cash flow can be split into 3:

  1. Scraping by, or just surviving
  2. Extra cash for investing back in
  3. Excess cash to start taking rewards

Personally, I find statements like these quite misleading as they imply that there is a clear point at which one phase starts and the other ends. But imagine, if you will, lots of grey areas and cross over between them and also that you can move up and/or down the scale depending on how good you are at managing your cash.

Level 1 is when you barely have enough cash to cover your costs of operating – there is no spare cash – most often this is attributed to start ups, but I know of many businesses that struggle to move past this phase as they don’t follow the next step before reaching the third – those businesses are forever doomed to either just get by or die!

Level 2 is where you have extra cash in your business over and above operating costs – my goodness you’ve worked hard to get to this point. You are now thinking that having made some headway it is time to take some money out for yourself.

I’ve been here and I know the temptation is hard to resist. But resist it you must. You are not yet the owner of a business – just a better paying job!

If you want to benefit from the freedom that a business that can operate without you can provide, you must use the extra cash generated by the business to invest it back into the business. Improve your capacity, develop systems that encapsulate your vision so that you can employ people to operate and manage them for you – you will make the business more consistent/reliable for your customers which will in turn make it more valuable to you. A potential purchaser can be shown that the business operates without you – you will be amazed what this adds to the multiples you can achieve at sale…

Cash management

Level 3 is the point where, as an owner, you can start to reward yourself for having put in the extra effort at level 2. The business has sufficient cash to operate and take advantage of opportunities and any excess cash can be withdrawn to allow you the freedom to live the life you always wanted.

This is not to say that ‘the business runs itself’ and that you will never again experience cash flow crises – the size of a business is no guarantee of plain sailing and consistent profit – just look at Woolworths, Carrillion, Thomas Cook and Intu… they all ran out of cash even though they were ‘profitable’!!

But, with a focus on generating cash first and NOT accounting profit, I believe these steps can be navigated and the ingrained discipline around cash management that will have developed will be a good basis for continued success.

Playfair Finance wants to help as many businesses as we possibly can. Contact us today so that we can help you set up a plan and work out a solution to keep the cash flowing through your business.

Call us today on 01383 624 425 or submit an enquiry and we will contact you.

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Commercial finance problems?

Money troubles.

I’ve been there.

I’ve had them.

And they’re not nice.


When I had them, I also had problems trying to access people who could help me with those problems.

So, my name is Graeme Shevas and I’m a Commercial Finance Broker, and I’m aware of the issues that some people are facing, having had them myself over the years. And I really can understand, I’ve been where you are.

So, if you are feeling some sort of vulnerability at the moment or you’re a little bit apprehensive about how you are going to trade forward, don’t be embarrassed if you are encountering difficulties. Pride is not going to help you at this stage.

What you need is somebody who is going to help you to win and succeed as you come out of this on the basis of providing you with a facility and a solution that will help you to trade out, and get back to the normal levels of profit and beyond, once we come through this.

Trade Credit Insurance

Something else that you may not have thought of is Trade Credit Insurance.

Normally this is an insurance that you would get if you had an Invoice Finance Facility in place whereby the lender insures, or you insure, the debts effectively, so that the lender takes them on.

You don’t get them back, and have them removed from your credit facility, the lender gets
them back and they are insured.

Now, normally, as I say, it’s part of an Invoice Finance Facility, but it is actually available separately.

So if somebody is in need of securing their selves in terms of bad debts, or the potential of bad debts, going forward, then this policy might be something that is of interest to you.

So, if you have a requirement to mitigate your risk of bad debt, there is an insurance policy,
called a Trade Credit insurance policy, and I have access to one of the major providers of that cover in the UK.

So, don’t bury your head in the sand, would be my advice.

Please get in touch and we will do what we can to help you with a solution that’ll help you to get through.

Let’s work together and bring as many businesses through this situation as we can.

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The transformed business finance landscape

I would like to use this time to try to take stock of what has happened over the last three months in terms of the Coronavirus pandemic and the support available for U.K businesses.

Even though it has only really been a few months, it has completely transformed the way some businesses do business.

And it has certainly transformed the financial landscape for all businesses and will probably continue to do so for the next maybe six, twelve, maybe even eighteen months.

Is this the landscape that you feel your business is in?

I think the prediction, really, from many bodies is that we will not actually get back to being where we were at in the next three years.

So it’s going to be difficult trading conditions and some of these problems that we have been encountering, you just could never have envisaged happening in a month of Sundays.

So, if you are experiencing difficulty with your finances, then please do not panic.

Do not bury your head in the sand.

Get some expert advice.

And if you get some expert advice, you have got a chance of being able to plan your way out of the Coronavirus pandemic and trade back to some level of normality rather than getting to the point where maybe you run out of cash and everything falls about around you.

That would be a tragedy for any business, but particularly as a result of, really, something you had no control over.

Contact us so we can put your business back into a thriving landscape.

So, if there is any way that we can help you at all, please DO get in touch.

That is what we are here for.

We want to save as many businesses as we possibly can, because only by businesses surviving will the economy start to thrive again.

Call us today on 01383 624 425 or submit an enquiry and we will contact you.

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Are you starting to panic about business cashflow or invoice funding?

I have been wondering whether there are people out there who have businesses who are starting to panic a little bit about their financial situation.

Now, this could be a growing feeling of concern that your cash flow is going to stall, or maybe you have noticed that the cash is not moving around your business as it did before the Coronavirus pandemic. You might have the growing realisation that you are going to run out of cash before you actually start to get money coming back in through the door.

Raising Invoices

Or it could be that you are raising invoices, but you are not getting paid as quickly as you would like to get paid.

So, you are wondering how you are going to pay your own bills, or it just could be that you don’t have any cash reserves?

As a result of not having any cash reserves, you have no confidence in terms of being able to meet your commitments going forward.

If this is the case, then we may have a solution for you, and it is a solution that I have used in the past in previous businesses to ensure that the cash keeps flowing, and that cash flow solution can be a life saver.


And if it is a life saver and we can help to save more businesses from going out of business, then that is why I am here.

So, if you do have a requirement to even just talk to somebody about it, because the worst thing you can do really is to bury your head in the sand and think that everything’s going to be fine, and it will go away.

It probably will not go away, and it will need to be addressed.

Review your businesses financial plan

Now, whether it is addressed with reviewing your financial plan and your costs or whether it is by putting a solution in place, something needs to happen.

Contact us today so that we can help you set up a plan and work out a solution to keep the cash flowing through your business.


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How has your business health been?

I was just wondering how your health had been throughout the Coronavirus pandemic.

I notice a lot of people in my local area have taken up jogging, and cycling, and myself included, certainly, have taken up walking to a greater degree with steps going through the roof over the last three months.

So, everybody is in a little bit of a better position with regards to their health and whether that has reflected in their mental health, is another matter.

But the area that really concerns me is the financial health of people’s businesses.

So, if you have a business and you are a little bit worried about how you’re going to trade through this period, the questions really to ask yourself are do you have a plan?

Have you got a plan to get through from where you are now to where you want to be?

Have you got cash reserves?

If you find that the invoices that you do start to raise start to take longer to get paid as a result of the knock-on effect from this pandemic, because everybody really has been affected, are you going to be able to meet the commitments that you have in terms of your bills?

And, do you have a budget and a cash flow?

And do the budget and the cash flow match or is there a shortfall there?

If the answer to any of these questions is no, then I would urge you to get in touch with us on the basis that we can probably come up with a solution for you.

Call us today on 01383 624 425 or submit an enquiry and we will contact you.

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Bridging Finance and the impact of Coronavirus

We provide services to businesses who need assistance with all types of finance, including Bridging Finance.

Hi, my name is Graeme Shevas.

I help businesses who need assistance with Bridging Finance and I wanted to give an update on the Bridging Finance Market as a result of Coronavirus and any impacts that it may have had. The first thing to note, really, is that there are still plenty of bridging lenders out there willing to lend, but there have been a couple of impacts.

The main impact really is that some lenders have been withdrawing from the market, and other lenders are actually finding that the funds that they have available to lend are reduced. This is as a result of people who are coming to the end of a bridge and not being able to refinance, due to the current situation. They are finding that the bridges are lasting a little bit longer, so the funds aren’t coming back into the coffers in order to be able to loan them back out again. There are some lenders who have not completed on deals, or who have had deals that were not completed and have now withdrawn the offer of finance. So, it’s a bit of a mixed bag.

The main thing to note, really, is that the amount of money that is loaned out on a bridge has actually reduced as a result of the value decreasing. So, if you’re looking at a property transaction for the bridge and the loan-to-value against which it will be secured is probably, on average, about 10 percent down, largely to do with the valuations, in terms of getting a desktop valuation done and reducing the amount of risk involved in that.

So, the bottom line is that they are still available, there are lots of lenders, and if you have a funding gap and it wasn’t necessarily property related, maybe it was to do with business, as long as you can prove an exit, (i.e. a way of actually repaying it in a period of time, so maybe you’ve got other funds coming in our you’re waiting for some finance against a commercial property or you’re trying to sell something and the money has not come in yet but you desperately need it now) it’s still available.

Bridging Finance is a flexible bit of finance which will suit many needs. If this is something that is of interest to you or you want to discuss it further, you can reach me on 07776 257 342, email or fill out the ‘Contact Us’ section on this website.

For more interesting hints and tips, you can also visit our YouTube channel at


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Scottish Engineering business who has unpaid sales invoices?

Hi, my name is Graeme Shevas.

I help Scottish Engineering businesses who are having problems with their cash flow to release cash from their sales invoices.

I’ve been in business for over 30 years and one of the questions that my customers have been asking me lately is ‘How do I get my cashflow moving now that other businesses are having trouble paying their bills?’.

Here’s my best advice: If you’re a Scottish firm operating in the Business-to-Business sector, you’ll be raising invoices for your products or services. At the moment, your normal payment terms for those invoices will most likely be 45 to 60 days.

You may have seen a drop-off in trade and the amount of money that you’re going to have over the
coming months will be significantly reduced.

You may well have enough to get you through until the point where you can begin trading at normal levels again, but when you need cash to pay the bills as you return to normal trading levels, you’re going to have to wait another 45-60 days for payment. Therefore, the actual funding gap is going to be longer than the actual business interruption.

How are you going to plug that gap? This is where Invoice Finance and the Coronavirus Business Interruption Loan Scheme (CBILS) guarantee may be able to help. As soon as you raise an invoice you could have access to 85-90% of its value within 24-hours instead of having to wait the 45-60 days to get paid. This will give you ready cash flow to allow you to meet your costs and thrive as we get back to normal. It is a straightforward process for the application and there are no fees for me to do that, as they are covered by the provider.

This is something that I specialise in and my role is to make sure that you don’t need to go to lots of different providers. You only need to go to me and I will access the most suitable providers based on the sector that you’re in, your turnover, and how your business is doing.

I can save you time and get you the deal that will work for you.

I hope you found that useful. If you’re an Engineering business based in Scotland and you need help with Invoice Financing, you can reach me on 07776 257 342, or fill out the ‘Contact Us’ section on this website.