One of my colleagues recently started work with a company in exactly this position – inheriting an overdraft with a margin of 2% but with a minimum lending rate including margin of 6%.

So further cuts in the bank base rate, if passed on by the lending institutions, will give no benefit to this company who are already losing the full impact of the reduction to 3%.

It prompted me to dig out all the facility letters at my various businesses – and whilst there are no similar clauses it has highlighted other areas of inconsistency or concern that I’ll want to negotiate on when we renew the facilities.

What can my colleague do? In the short term, not much, as the possibilities offered by other banks will be severely limited at present – in the medium term then renegotiating or moving are the obvious options.

Above all though it has made us examine more carefully than ever before the line items in our cost budgets, reviewing the IT replacement plans, looking at the scope to increase prices, to eradicate low margin contracts so we’ve probably achieved more value from our budgeting process than ever before.

Overlaying onto that an opportunity to double turnover through one new commercial initiative has meant some interesting discussions with our bank regarding short term working capital requirements – to which, I’m glad to say, the bank have reacted favourably and promptly.

So, listening this morning at a breakfast seminar to one of the Agents from the Bank of England speaking about the range of forecasts that they have for the economic outlook in the next 12 to 24 months and the uncertainties still surrounding the financial sector in the Uk just reinforced to me the need for all businesses to have strong, effective financial management and forecasting in place to enable them to react to anticipated market and economic changes rather than to react to historic events.

Disappointed? … probably more reassured actually that I shared her feelings about all the turbulence that we’ve gone through in recent months and which shows little sign of abating.

A feeling of inevitability, that the ever upward spiral of house prices, the seemingly “open chequebook” approach to lending was sooner rather than later going to go horribly wrong but that the traditional conservative approach adopted by some of our financial institutions would see them come through stronger in the end.

So we are likely to see a period of consolidation in the industry – much like has happened in the TV industry – replacing a multitude of institutions all competing aggressively for our business.

Fears of a lack of competition? Maybe, but I think I’d rather live with that in order to regain financial and economic stability in the medium term.

For us the process took about 5 months – for other businesses it could be much longer – and particularly in the current economic climate no business can afford to take its eyes off the ball for any longer than necessary.

It’s more important than ever to have a firm hand on cashflow, sales forecasts, debtor days and your FD will be well aware of that. Along comes an opportunity of an acquisition or merger and what happens is the key players get drawn into that situation and the business is neglected.

Upon reflection, that’s actually a major business opportunity for us – the ability to bring in an experienced, commercial part-time FD to either take over the day to day responsibilities or to work on the specific transactional requirements is a great facility for an incumbent FD to have available.

Time to look again at foreign currency protection I think.

This month I need to focus on preparing the 2008/9 budget for one of my businesses – a multi-site, people based business with a number of separate income streams.

Every year we try to simplify the process but never seem to avoid a plethora of multi-tabbed Excel spreadsheets running usually to version 7! This year the plan is to adopt standard cost models across all the activities and then add site-specific exceptions thereafter; this should expedite the process.

But as always it will be the new business development projections that will cause the most debate and controversy.

At what stage will business confidence start to build and what growth assumptions should we make? What scope is there to increase the level of existing contracts? What level of cost increases should we build in for staff, fuel and travel? Should be an interesting few weeks.

The numbers attending the first day’s sessions were significantly greater than those attending on day two (and I don’t think it was my presence on day two that caused this!).

Having thought about this, I think this is a positive sign of how business owners are thinking – that is, let’s look at new ways of doing things, really get to understand how we can better position our business so that we appear higher in the searches than our competitors, understand the ins and outs of Google searches, key words, the new methods of communication now available, understand how social networking might work for us.

That said it’s still important that businesses take heed of the messages I and my fellow speakers delivered on day two but I for one can live with the fact that businesses are looking ahead and focussing on how to take their businesses forward.

And as with most e-mail communication these days only 10% really need attention, the rest are cc’s for information, non-urgent messages and, despite a fairly ruthless spam filter, a number of junk e-mails which get consigned straight to the Deleted Items folder.

No voicemails and no faxes and surprisingly little post – just brings home how far we have moved on in recent years.

I recall a long discussion a number of years ago with my father-in-law (who had just retired from a lifelong career for one of the regional electricity companies) trying to explain how we didn’t use the telex machine anymore (although it did sit in the corner and would occasionally start chattering away like a demented typewriter) and how everything was now done by fax, a technology that he found hard to imagine.

Goodness knows what he would think of e-mail and online web-conferencing and the like! It’s become a critical part of our lives but how important it is that we stay in control of our inbox and not the other way round.

Undoubtedly it does facilitate easy, swift communication – particularly highlighted in a Sale/Purchase transaction where I am involved at the moment where marked-up drafts seem to arrive from the lawyers by the minute demanding attention – but I’ve learnt that I need to become more disciplined in dealing with e-mails otherwise the day can be hijacked by that “Unopened Messages” icon in the bottom left hand corner!

So what else has been happening while I’ve been away?

For those of us working in SME’s who are often working on our own and not with other accountants there’s a real need to have a cost-effective, reliable method.

So I’m looking at some of the web-based CPD packages at the moment to see whether they fit the bill – it strikes me that there’s a real gap in the market that the professional firms could fill by supplying something like this or a regular seminar programme for their clients.

It’s all very well running the annual Budget Seminar but, I don’t know what you think, but I’d be prepared to pay an annual subscription for a locally delivered high quality Professional Update running to an annual programme.

Having had the luxury of two sites and the flexibility that results from that in the event of some crisis we will now have to have another relocation option to ensure continuity of service.

Ironically this morning we arrived in the office to find the building operating on emergency lighting due to a large fire just down the road – no power, no phones, no IT but all of a sudden mobiles and Blackberrys come into their own.

After a couple of hours normal service was resumed but it was a good test of our preparedness for a wider scale disruption.

However, when large businesses impose payment terms on their suppliers there is little that one can do except grit your teeth and put up with it.

There are plenty of stories around about large retailers demanding a contribution towards marketing costs from their suppliers as a way of getting higher discounts or businesses imposing extended payment terms of 60, 90 or even in one case up to 105 days!

However as one company found recently sometimes it is worth challenging these practices – one big High Street name recently announced that they would extend payment terms to 75 days after the end of the month in which an invoice was dated, and also introduce a settlement charge of 2.5%!

One small business challenged this, was rebuffed initially but then managed to persuade the large firm to amend its terms … for them at least. Whether they will get more business remains to be seen – but why should SMEs act as unofficial credit providers for large businesses in the first place?