Cash is king. The majority of businesses that fail do so because of cashflow issues.
Question:
What are the 3 most important things in business?
Answer:
Cashflow, cashflow, cashflow!
Cash flow is the life blood of any business and more businesses go bankrupt because they fail to keep the cash flowing than fail for any other reason.
The Inland Revenue and HM Customs are now much more aggressive in chasing monies they think are owed to them now that they have lost their privileged creditor status.
Insolvency
A company or business is insolvent if they cannot pay their creditors as the invoices fall due.
In order to avoid this happening you need to ensure that you get paid on time by your customers so that you in turn can pay your suppliers when their invoices fall due. |
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Please find below some related newsletters and articles:
:: Are You Still Having Cashflow Problems?
:: A Purchasing Focus
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The Ten steps you can take are:
- Make sure your customers know your terms of trade. i.e. payment is due in 7 days. Many companies take 30 days to pay but make sure they know what your terms are and the reasons for them.
- Make sure you raise your invoices for work done promptly.
- Send out statements at the end of each month to all customers who have outstanding invoices. Many Finance Directors will only pay when they have received a statement, so send it early.
- Telephone the customers purchase ledger manager and ask if your invoice is on the next payment run. If it is good, if it is not ask why! And also find out what you have to do to get it onto the payment run.
- Get to know the purchase ledger managers and talk to them regularly.
- Find out when each customer does their payment runs and diarise them so you know when to chase your payments.
- Where possible invoice when work is completed and let the customer know that you expect prompt payment as the work has been completed.
- Where possible get either staged payments for a project or a payment up front for materials, etc.
- If the relationship is ongoing ask for a standing order to be raised in your favour so that you get a regular monthly payment without chasing the customer.
- Remember to have the standing order changed when you re-negotiate your charges each year.
Call us today to find out how we can help your business grow. |
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