Professional & Management – Page 113 – STL

Are you really minding your own business – or is someone else?

The importance of cash

Avoid fraud to sustain profits — Sustain profit by avoiding fraud

The key requirement for any business is its ability to generate and sustain profit. If building ‘cash-flow’ is the crux of excellent business management, protecting it should be likewise.

Money converts products, labour and a selection of mechanisms, such as insurance, energy and marketing to give life to your brand. It employs staff, attracts shareholders, transforms into assets, and ultimately supports independence and influence. As we build ‘cash flow’ we can inadvertently establish ‘leakages’ and attract fraud.

Here are five basic principles to help prevent this:

1) Monthly bank reconciliations

Keep accurate records of transactions and set a monthly review, preferably by an independent source. This is a critical stage in prevention. Compare company records of on-site transactions with deposits and balances to monitor your business. Reconcile to identify ‘hidden’ costs and charges you may have missed. It can be an indicator of developing trends, such as a run on a product, or discrepancy with unauthorised payments.

2) Delegation of Cash Handling

It is said that familiarity breeds contempt. Prevention by the shared responsibility of handling cash can remove this. Separate the workload for receipt and payment to ensure that divisions and personnel work autonomously. This accountability which will accurately support your monthly reconciliations. Irregularities will be highlighted by individuals.

3) Accountability of variances

An accurate system for transactions, sales and payments is instrumental to help staff do their work in a safe environment. Mistakes can happen, so have a process, either computer or ledger, that monitors balances, payments and sales as a daily report. With consistent management, errors can be quickly uncovered.

4) Authorisation

There will be key figures within your organisation who will be required as a signatory. This is a position and should be clearly defined with parameters on

Plan carefully to avoid fraud — Plan carefully for expected payments

limits and responsibilities. For example, suppliers may not be paid by a signatory. But client reimbursements and refunds can be.

A ceiling needs to be agreed where any unduly high payments need further authorisation. Accounts for each signatory should be considered as a regular report. We must consider advance planning for expected payments.

5) Internal audits

Regardless of size every business should have regular internal audits. This ensures systems have not been compromised and that accuracy is managed. Most operations that run into financial difficulties from tax discrepancies and unrecoverable losses or fraud. They’re often victims of their own failings. Regular internal audits conducted by senior staff or external agencies are crucial to understand business liabilities.

These can include exact stock takes of all on-site products. Or an assessment of invoices both paid and current and bank reconciliations. Remember, everything is an asset of cash.

Use these five principles and your efficiency, productivity and business performance will give you a cash value to analyse immediately. You will see the strengths and areas needed for attention. Ask yourself – are you really minding your own business, or is someone else?

Negotiating tactics

Negotiation consists of 4 stages:

Prepare: what do we want?
Discuss: what do they want?
Propose: what could we trade
Bargain: what will we trade?

The last 3 stages unfold across the negotiating table, but the first one always happens in advance.

You need to be well prepared to ensure maximum productivity;

know what you want from the negotiation (the goal)
how you’re going to achieve it (tactics).

Negotiation Skills Training STL London — negotiation training

I firmly believe that the success or failure of your negotiation is determined long before you walk into the room and start talking!

Let’s consider some of the negotiation tactics available to you:

Wheat and chaff

One party loads their demands with chaff (low priority items, which they pretend are a high priority for them), which they intend to concede later in exchange for the wheat (the true high priority items, what they really want from the negotiation).

Salami

Salami is sold in thin slices, so in the negotiation you get what you want little by little.

Competition

Make the other party aware that you have other proposals to consider from third parties. So, if we can’t do a deal with you…

The wooden leg

During the negotiation, one party indicates that they are suffering from a limitation or constraint that makes further movement impossible, for example “The price is non-negotiable. We can’t move on that”.

Boredom

Use your body language and demeanour to indicate that the other party is failing to impress you.

Delay or stalling

The other party will have a deadline, so if you can find out what theirs is, or create one for them, you gain the advantage. If you know that they have to reach an agreement today, then suggest ending the meeting as you need to do some research, but you’d be very happy to meet again next week?

Walking out

A tactic designed to show that you have reached your absolute limit; a point beyond which you cannot go because the deal is not worth doing for you or your organisation. Before you begin negotiating, you should establish your WAP (walking away point). It acts as a safety net. If you are buying, it sets the highest price you are able to pay – you cannot go above it, you simply don’t have the funds. If selling, it represents the lowest price you are prepared to accept. Below it, the deal is not worth doing. We do not negotiate at any cost. If you do walk out, make sure you have alternative parties to negotiate with (see Competition).

Limited authority

This tactic allows one party to stall the negotiation, buy some time, or to say no without causing offence. If the other party is trying to push you beyond your WAP, just tell them that you don’t have the authority to make that decision. Sorry!

The Russian front

This involves putting forward 2 proposals, one with much worse consequences than the other. The title originates from World War 2, when it was used to motivate German soldiers, i.e. “I’ll go anywhere, but please don’t send me to the Russian front!”

The nibble

One party throws in a final demand just as agreement is in sight. They are banking on the other party giving the concession away cheaply to avoid rocking the boat at such a late stage.

Business training london negotiation skills — commercial negotiation training

Conclusion

If we are well prepared for a negotiation, then the rest of the process should be more efficient and straightforward. Before you sit down at the table, be clear about your goal then select and apply the right tactics in order to achieve it. Which of these tactics do you think could make the difference to your next strategic negotiation?

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