Helping Clients Outrun the Recession

With the local economy in the dumps, business development advisors are working with clients to tighten up their defenses.

In addition to dispensing advice on how to better monitor cash flow and accelerate receivables, business development advisors are helping clients weed out bad customers, eliminate money-losing lines of business, pare staffing levels and lock in today’s ultra-low interest rates.

Monitor Receivables for Faster Payment

Tutored by accountant Pat Costello, Lisa Skriloff has become a master at monitoring receivables. “I try and eliminate the lag between the time my bill reaches the client’s accounting department and the time the check is cut,” says Skriloff, president of Multicultural Marketing Resources Inc. in Manhattan.

Leaving nothing to chance, she calls the client’s accounting department to make sure her bill has arrived, the president to see if he or she has signed off on it, then the accounting department again to ask when the check will be cut. She has even talked many of her retainer clients into authorizing automatic payment of her bills.

“Don’t give customers the opportunity to make excuses, such as ‘We didn’t receive the invoice’ or ‘There was a problem with some of the merchandise,’ ” says Justine DeVito Tenney, a small business specialist. She suggests her clients use bank services such as lock boxes to get funds into their accounts more quickly. And sometimes it’s cheaper to accept credit cards than it is to chase receivables or bad debts, she says.

Lock in a Line of Credit to Boost Confidence

Even though Deborah Wainstein didn’t need it at the time, her accountant insisted last year that she get a line of credit for her Manhattan employment agency.

“Her expenses were low, and her cash flow was still good,” says Wainstein’s accountant, Anita Katzen. With that credit line, Wainstein would get a bit of a cushion that would cost her nothing until she actually needed to draw on it.

This year, with many of Wainstein’s competitors struggling to keep the doors open, that credit line has helped her company, Priority Staffing Solutions Inc., not just to survive but to thrive. Although she has not tapped into it, just having the credit line has given Wainstein the confidence to make a major push, adding employees, buying software and producing new marketing materials.

Check Creditworthiness of New Customers

Chuck Ludmer is cautioning his clients to pay close attention to the creditworthiness of new customers. Running credit checks on new customers is a must, and increasingly he’s advising clients to buy credit insurance to protect against losses.

Analyze Cost Data to Preserve Margins

Many accountants are helping clients bring their profit margins up to industry standards by analyzing their sales costs more closely. Many small businesses aren’t used to generating the kind of data that exercise requires, but the payoff can be well worth the added effort.

After carefully studying sales costs for a manufacturing client, for example, Mike Gould, advised him to hire more employees so that his factory could run double shifts. “Doing that instead of paying overtime cut their (payroll) costs by 30 percent,” Gould says.

Outsource, but Consider Each Case Individually

Outsourcing, a perennial cost-cutting favorite, can generate major savings but must be approached on a case-by-case basis. Gould has counseled several local clients in the importing business to outsource everything from warehousing and shipping to order processing and billing. “They pay a fixed percentage of sales, which allows them to fix and lower those costs,” he says.

Others, though, warn that outsourcing has its limits. “There’s a point at which it becomes cost-inefficient,” cautions Joel Gensler. He points out that the cost of paying an accounting firm by the hour can sometimes outstrip the cost of keeping a bookkeeper on staff.

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Copyright 2002, Crain Communications, Inc.
Copyright 2002, RAN ONE Inc. All rights reserved. Reprinted with permission from www.ranone.com.