Azets’ cashflow management tips for businesses in Durham

Andrew Rowe

Swapping credit cards with virtual replacements could help businesses in and around Durham improve cashflow.

The suggestion comes from Andrew Rowe, Office Managing Partner, who works out of the Teesside office of regional accountancy and business advisory firm Azets.

Working in close partnership with a wide portfolio of clients, large and small, Andrew said that removing traditional cards for orders, expenses and other expenditure gives a business greater control.

It is one of Azets’ five top tips for SMEs to recalibrate their orders and processes to improve cashflow when it comes to suppliers and creditors.

Andrew said: “At a time when the cost of doing business continues to squeeze SMEs and their finances here in Durham, it is important to ensure no cash leaves the business or is tied up in stock than is necessary. Reviewing and then adjusting all of the ways a business spends money on a regular basis along with its relationship with suppliers are key.

“This can be difficult amid the daily demands at an SME but blocking out time and seeking professional advice can result in significant cash flow gains over time and a better financial position that allows investment and growth.”

Azets has offices in Durham, Newcastle and Teesside.

Here are the tips:

• Remove credit cards. This is especially useful for staff who operate out of the office. Simply removing company credit cards so staff have to spend personally and then claim back on expenses can make them seek better value and halt spending on items which may not qualify. Alternatively, there are many apps which allow SMEs to set up virtual credit cards either within the app itself or in a phone’s wallet.  Manage cards remotely to review activity, adjust spending limits or easily add or remove credit cards to avoid over or unnecessary spending. Pictures of items and receipts can be scanned into a virtual credit card app. And apps can link with software accounting packages to cut administrative time and costs, while providing a more accurate and updated picture of cashflow.

• Review suppliers at least annually and compare to competitors. Comparing prices, payment options and offerings provides the opportunity to test the market and renegotiate purchase arrangements or payment options to improve margin.  It can be difficult to remember to do this regularly – but setting an annual or quarterly diary reminder can help.

• Review controls on ordering. It’s common for SMEs to tie up too much cash in stock unnecessarily.  Reviewing orders against sales and inventory will help stop over ordering and preserve vital cash. This also applies to company expenditure from pens to uniforms and tools. Reviewing regularly is key to ensuring controls are appropriate to ensure optimum cashflow and stock management.

• Set budgets and delegate authority for spending. When reviewing controls on ordering, set clear limits on who can issue purchase orders for stock or supplies – and ensure that spending limits are in place for each individual so they can only authorise expenditure for a certain amount or for certain orders.

• Negotiate deferred payment agreements. Focus on payment options and not just price. A supplier may have no room for manoeuvre on price or may be cash rich where timely payment is not a priority. Could they, for example, take payment on 45 days rather than 30 or accept payment in instalments? It is worth asking the question – don’t ask, don’t get.

Azets recently warned that “many directors are running out of options, ideas and energy after five years of firefighting” since the pandemic - administrations in England and Wales in January reached their highest level since June 2024.

And the firm highlighted that local businesses which export small parcels to the EU with a value below €150 per an item face a €3 duty for each one from July, further squeezing profit margins.

According to latest annual business activity figures from the Office for National Statistics, there were 73,000 (2.7%) VAT and/or PAYE businesses in the North East compared to 2.73 million in the UK.