Top Tips
Keep track of your cash flow … the success of your business depends on it
Keeping a strong and steady flow of cash running through a business is
critical to any firms long term success, enabling the company to pay its
staff on time, fulfill new orders, purchase raw material and even new
equipment.
But maintaining a healthy
cash flow is not always as straightforward and easy as many owners and
managers believe.
To help entrepreneurs improve their cash flow management Bibby Financial
Services has developed the following 10 top tips:
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Credit check your customers – always run a credit
check before entering into any business relationship. Aim to only
trade with companies that you know are not only creditworthy, but also
have a good track record of paying their bills. It may also help to
set your customers realistic credit limits
-
Be clear with Ts & Cs – if your business terms are
seven days or 30 days, make it clear. Set out your terms of trade
early on. Include them with order confirmations and invoices
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Always check your invoices – avoid invoices being
returned by addressing them to the correct department and a named
individual if possible, including details of the job, a purchase order
number, the correct amount, your business terms and a date
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Send that invoice, don’t put it off – issue
invoices immediately on completion of the job and follow them up with a
phone call to check if they’ve been received and that all details are
correct
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Be strict with credit control – don’t be afraid to adopt
a follow up system that involves issuing statements and reminder
invoices. Call your customers if their payments are late
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Pay attention – are your customers acting
differently? Are they suddenly hard to get hold of? Are they
sending you post-dated cheques? This can often be a sure sign that
something is happening. Remember – forewarned is forearmed
-
Take stock – plan ahead and don’t hold too much
stock. Holding stock costs money. Investigate the possibility
of more frequent deliveries from suppliers so that stock levels can be
kept to a minimum
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Manage your suppliers – shop around to make sure you are
getting the best deal. Also negotiate longer credit terms and
volume discounts to free up more cash to reinvest in the business
-
Keep people in the picture – remember to communicate
with all the key people involved in your business including your bank
manager, suppliers and customers. If you tackle issues early on
they don’t develop into business problems later
-
Keep the cash flowing – review your funding to ensure
that it is still meeting the needs of your business. It may be beneficial
to take a fresh look at the alternative solutions available. Invoice
Finance is one such solution that can guarantee your business has a
flexible supply of working capital
David Robertson, chief executive of Bibby Financial Services, said: “These
tips on keeping cash flowing may seem obvious on reflection, but many
companies get bogged down and forget to apply these simple rules.
Remember you may have won the order but getting paid is just as important.”
