Here are ten tips for managing your cash flow where you are a small business. Pearson Buchholz work with many start-up businesses who find this sort of advice invaluable as a guide on really easy, cost effective things they can do themselves to really make a difference with the cash balance: -
- Anticipate when you need an overdraft and give you credit provider plenty of time to arrange the facility.
- Maintain a 90 day cash flow schedule and be realistic about when your customers pay so you are in the driving seat and can anticipate problems and talk to the credit providers early.
- Implement a strict credit control process and monitor this. Try and segregate the sales relationship and the credit control relationship by using different people.
- Resolve disputes early even if it means you having to let the customer win the argument from time to time.
- Reward good customers and fast payers by dealing with them in priority where possible
- Pay suppliers over time rather than discounted up-front payments.
- Send suppliers cheques, ask customers for direct bank payment.
- Undertake credit checks on customers, its’ too expensive not to.
- Ensure customers are put on stop when needed and under no circumstances allow anyone to override the decision – often the guilty party is the owner!
- If you are late paying suppliers open communication between you is needed, be informative and truthful even if you are asking for time to pay.
Ian Woollard has advised many small businesses on working capital funding.