Cash Flow Management | Bibby Financial Services

Make cashflow a key priority

A lack of cash is one of the biggest reasons businesses fail. Having good cashflow puts your business in a better position to grow, invest in new products, pay staff and negotiate better supplier discounts. Cashflow is vital to the health of any business and you cannot prosper without enough cash to meet your immediate needs. Therefore, cashflow needs to be a key priority.

Accounting tools

You should be able to see how much you owe, how much you are owed and how much you have in the bank. There are plenty of accounting tools available to help you do this, such as Xero, Quickbooks and Wave.

It is imperative that you devise a strategy that will facilitate your being paid promptly, whether your clients are small businesses, multinationals, or public sector entities. David Mellor, The Guardian

Improving cash management

Managing your cashflow will allow you to improve operational efficiency, better manage your costs and mitigate operational and financial risk. It also requires information and you will need to regularly review your data on:

Customers' creditworthiness
Customers' current track record on payments
Outstanding invoices
Suppliers' payment terms

Short-term cash demands
Short-term surpluses
Current debt capacity

Effective credit control

Effective credit control can mean the difference between success and failure. It's an important aspect to running a successful business because, without money coming in on time, your cashflow can be impacted. As soon as you launch your business, you should make sure you have effective credit control measures in place.

There are some simple tasks that you can do to make sure your credit control is effective, which include:

Have a purchase order system to help avoid surprises later
Invoice your customers on time and make sure you send them to the right person
State your payment terms clearly on invoices
Carry out credit checks on customers and set credit limits

Ask for advance payment where possible
Chase for payments by email, letter and in person
If they still haven't paid after 30 days, put all further work on hold until you receive payment
Check your debtor days every month

Cashflow finance

You can also work with specialists in cashflow finance, who provide access to a flexible source of funding that matches your business requirements:

Factoring: you receive a combined funding and credit control service.
Confidential Factoring: you receive a confidentially run funding and credit control service.
Invoice Discounting: you receive a funding only service.
Trade Finance: you receive funding to buy goods from UK or international suppliers for resale to your customers.