SME Agony Uncle


It is no secret that an overload of bad debts can cripple a business of any size; but for an SME, too many blockages in cash flow can spell disaster.

New figures released by Bibby Financial Services this week found that, on average, Irish SMEs have to write off €13,000 a year in bad debt due to customer non-payment or insolvency.

Nearly 60% of Irish SMEs said collecting customer payments on time was the most difficult part of managing cash flow - with nearly €2bn collectively lost every year.

Bobby feel's that many Irish businesses could be doing a lot more to protect themselves.

“What is the point of doing business with somebody if you stand back from it and you don’t get paid?” he asks. “He who shouts loudest actually does best in this whole era.”

It is essential that a business has clear terms in place with all its customers - and regularly examines its debtors book.

“It is a good idea to do a kind of a route and branch review,” says Bobby.

“Where are we now? Who is getting credit?

“How much credit is this small guy who only buys off me every six months getting? Whereas there is another guy who is buying off me every week; how much credit am I giving him?

“It is a myriad of things, and I think it is like anything else - unless you have a policy and you are proactive in this area, you will be somebody who has bad debts.”

Hi Bobby,

I’m just back to work after a two and half week break. I am finding it impossible to settle back in and I can’t motivate myself. It is damp, it is cold, it is gloomy. Any suggestions?

Ann in Cork.

“I would say to Ann, she needs to do something different,” says Bobby. “She needs to give herself some new targets and maybe change her approach to what she is doing - clear her desk.”

“It is actually a problem trying to switch yourself on again after such a long down time.

“I think she just has to shake it off; embrace new targets, new challenges and snap herself out of it.”

I run a small business in the printing sector.

I gave a number of my clients a presentation box of wine for Christmas. A guy who is more senior than my client in a private business rang me up and expressed annoyance that he didn’t receive any gift from my company.

Although I have no personal dealings with this guy, I am worried that my relationship with this business could be damaged. Any suggestions?

Pete in Dublin

“What I would say here is that, it is slightly bizarre that somebody he has never met or dealt with would ring up and say where is my box of wine?” he says. “I would be slightly wary about that for a start.”

“I don’t know how well Pete knows his own contact in this business. If he knew him well enough, I would suggest he quietly ask what the scene is here.

“I would be reticent to engage with this guy because he sounds like bad news. I would just ignore it and move on. He smells like trouble all the way.”

Hi Bobby and Ivan,

I have an old newsagents business in Dublin on a property I own. Sales have been steadily declining over the past decade. It barely pays me to open for trade anymore.

I was looking at all the new donut shops opening over the past few months. I am thinking my site could be perfect for one. Do you think the donut thing is a fad? Or could they be the next big thing?

Andy Dublin 1

“Major chains of branded donuts have come to this country three times and failed,” says Bobby. “I would say it is a fad.”

“The quality of what is out there at the moment is much better than it was and there has been some good innovation in the area - but it goes against all the trends of how people are buying and how they are eating.

“I just think; particularly at this time of year; I can’t see them all lasting. There are too many of them and they have all arrived too quickly. I think maybe the strong will survive - one or two chains.”

Bobby does have another suggestion for how the property could be put to use.

“It sounds like he has been in this newsagents business for a long time,” says Bobby. “It sounds like he does own the property, so there is no rent in play. Why doesn’t he let the place out, just take the rent and retire?”

I run a small taxi service business employing six people.

Recently four of the six started becoming a little unreliable. There have been numerous calls-in sick and I think they are having, 'duvet days.'

This seems to be concurrent with my own absence from the operation; as I have opened a separate business lately and I am spending less time on the ground there.

I currently pay staff for sickness but I am thinking of reviewing the policy, what do you think?

Sophie in Cork

“Firstly, who is in charge of this business?” asks Bobby. “Sophie has clearly mentally checked out and is in another business. It is a case of when the cat's away the mouse will play.”

“I think staff will be hugely influenced by the example of leadership on the ground there.

“Sophie is perfectly entitled to review the staff sickness scheme.

“If I was her, I would be calling them all together, I would be putting somebody in charge and I would be saying, ‘if this continues I will be stopping paying you when you are out sick.’”

I run a manufacturing business and I have just finished my financial review with my accountant, who says I must put up my prices as I lost money last year.

I work hard and I think my business has super potential as we have had explosive sales growth over the past three years. I am worried that if I increase prices I will lose business to my competitors who are very aggressive in the marketplace.

Should I cut prices?

For Bobby, the simple answer here is yes. When it comes to sales, there is no room for "vanity over sanity" and the last thing a business owner wants to become is a "busy fool."

“I am sure this chap is working hard,” says Bobby. “I am sure he is really, really putting the hours in, but I think when you stand back from your business and you are losing money, you say, 'why am I doing all this?'

This listener is in a competitive market and feels he could be in danger of losing out to his rivals - but there are plenty of options available when it comes to pricing.

“I would be looking at a customer analysis on a sale-by-sale basis,” says Bobby. “He may not need to put up his prices to all his customers.”

“It is a manufacturing business so it is probably well within his remit to be able to charge different prices to different customers, depending on value.

“He could also look at offering a rebate to his larger customers.

“There are different ways to skin the cat but he does need to get his sales up and improve his margins.

"There is no point in doing it if you are losing money.”

You can listen back to all of Bobby’s employment advice from Tuesday’s The Hard Shoulder here:

If you have a business or SME related query you would like answered - you can get in touch with Bobby each week by simply sending a short mail to [email protected]

Back to top