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What makes a real financial health check?

When a new client comes on board, the first question we ask at Orchard Business Finance revolves around when they last completed a financial health check on their business. The most common answer is that they can’t remember, or even that they have never had one done. Others will say that they complete a financial health check once a year, making it sound like they’re staying on top of their company’s finances.

The reality, however, often turns out somewhat different. When you scratch the surface and discuss the financial health check they undertake, it tends to revolve around making savings on utilities, insurance and accommodation/entertainment policies for staff. While these are a good start, they are hardly indicative of a comprehensive financial health check. Cost savings can be achieved in so many ways, but when an adviser sits down and discusses things with a business, they find that there has been no review of things like invoice finance, asset finance, unsecured business loans or commercial mortgages.

A brief case study

Let’s look at an example. A client comes in and speaks to our team, and we learn that they have an invoice finance facility. They’ve had that facility in place for 12 years now, staying with the same provider throughout that time. It turns out they are paying a small fortune in fees, so we begin working with that client to look at ways of restructuring the facility, either with their existing lender or by exploring options for a different one.

We go on to look at some of the finance deals they have. As a company that’s been in business for 25 years, with a very good credit rating, the last thing we expect is to see them having asset finance deals with Tier 3 providers. These providers offer a very specific service that works for some companies, but it isn’t right for the client. By simply doing some rough calculations, we find that we can move the client’s asset finance deals to a new provider over the same term and make significant savings on monthly payments. This is not to mention the unsecured business loan they had with, essentially, the business equivalent of a payday loan company – we’re working on reviewing that right now.

The bottom line

The point of all this is that every business should have a regular financial health check, and this should not be limited to the day-to-day running expenses you face. Dig a little deeper into your finances and look at all the financial products you have in place. Review them in detail, and assess whether you can make changes that will reduce your outgoings – Orchard Business Finance is part of a community of great brokers who can sit down with you and carry out this type of review.

It’s so important to look at your company’s financial agreements and look for opportunities to make improvements. If you’ve had any agreements in place for more than 24 months, particularly invoice finance, then there is probably scope for improvement. There are savings to be made, you just need to look closely enough.

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