Belfast Telegraph

Sunday 21 September 2014

Small firms should be proactive in bid to beat credit crunch

Harry Parkinson
Tom Leonard

QUESTION: How do you expand your business within the current economic climate? Harry Parkinson, managing director of Close Invoice Finance (Ireland), replies: Although there's no denying that most SMEs across the UK and Ireland are feeling the pinch of the credit crunch, it's certainly not all doom and gloom. A recent survey showed that more than half of SMEs polled expect their businesses to expand over the next 12 months, and many of them don't feel that the market slowdown will directly impact their plans for growth.

Good financial planning is crucial to survival and growth. It's time for SMEs to look outside the traditional finance routes, particularly since banks are trying to reduce their exposure to credit risk. Invoice finance allows you to turn your invoices into cash thereby generating maximum working capital from the sales ledger balance.

This makes it a flexible way to help companies finance their business, manage cash flow and fund expansion plans all at once. This is an attractive option for many SMEs who will need to take a

critical look at their financing if they are to keep on course with growth targets.

Now more than ever, it's vital to be proactive.

Look at areas where your business is strong and you're confident of growth and concentrate your efforts here.

It's also imperative that you keep in touch with and nurture your clients and potential clients.

Inspire their loyalty, reassure them

and retain them.

SMEs can not only survive this downturn, but can actually thrive.

At times like these, many clients may prefer to deal with smaller businesses, and welcome the personal service they offer.

Small businesses should see their size as an advantage, it allows the agility and flexibility to respond to changes in the market and respond accordingly.

QUESTION: My firm is likely to be involved in a merger with another company in the coming months. What communications should I provide to my employees?

Tom Leonard, senior client partner at Towry Law, replies:

When companies are involved in merger and acquisition activity or corporate restructuring, this is often a time of great uncertainty and insecurity for employees. While there will be sensitivities which mean that most employees will probably not be informed of any activity in advance, once the news can be released into the public domain, a great deal of emphasis must be placed on effectively communicating to employees.

This is especially the case where there are likely to be redundancies, as it is perfectly natural for employees to consider their positions, likely outcomes of the changes and alternative employment options. Employees need to understand why the merger is taking place and as far as possible buy into that decision.

This communication needs to be followed up by actions, so that employees understand that the company will be doing what it says. A number of ‘quick

wins' are important to help build employee confidence and engagement.

It is vital that aspects relating to Employee Benefits are not overlooked, as they may not only involve financial considerations but can also affect the motivation of key employees through significant organisational change.

For example, when two companies come together, these companies have often been working to different pay scales and benefit levels. This needs to be addressed as a matter of priority. In the ideal world employees would receive the ‘best of breed' benefits from both organisations, but the cost of such a move may be prohibitive.

Where contract harmonisation takes place without effective communication, an employee is likely to focus on the loss or reduction of one benefit rather than any potential gains they have made in other areas. This again can lead to the potential loss of employees, and the time, cost and inconvenience of having to recruit. As you are likely to be involved in merger or acquisition activity, I would recommend that you take professional advice now, in order to prepare a thorough employee communication strategy that is tailored to the needs of your business.

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