In order to manage your business effectively you need to be sure that it has enough cash to keep trading and that it is running profitably. To ensure this happens, I recommend you review your financial status at the start of each and every business week. You will have financial records, probably in one of the most popular accounting software packages such as Sage, QuickBooks or Xero. Either your own staff or your accountants will use these to prepare VAT returns and the other legal requirements such as the annual accounts required by Companies House. These accounting systems can also produce many of the essential figures you need to review on a weekly basis. Additionally, you need to forecast which clients are likely to pay their invoices this week. This is often not the same as those who should pay this week. Accurately forecasting your weekly cashflow is a skill every business needs to master. Not all of the figures in the list below will apply to all businesses. You … [Read more...]
Four steps to make sure your clients pay on time
We all understand that not collecting payments on time has as a severe impact on your cash flow, but let's not forget also that you are effectively giving your clients, your debtors, interest-free credit, and this also has an impact on your cash flow and your profit. Whatever the size of your business - start-up, sole trader, micro business, small business or SME - the remedies are the same. Follow these four steps and you will reduce the amount of money owed to you: send out the invoice as soon as you ship the goods; call the client the day after you send out the invoice to check the invoice has been received and there are no issues with the goods or services supplied; call the client 5 days later to carry out the same checks, so that there no excuses on that front; and call the client 5 days before you expect to get paid to make sure your invoice has gone into that month's payment run. Pretty obvious really, but it is surprising how many companies are not doing that. DSO - … [Read more...]
