06 October 2017

If you run out of cash, managing the day to day activities of a business becomes near impossible. Within a commercial enterprise you need to be able to convert sales into cash before the bills are due. Even a healthy balance sheet may show you as ‘asset rich but cash poor’ making the payment of bills, staff wages, overhead costs and taxes each month extremely difficult.

We look at 5 things you could be doing in the short term to help increase your businesses cash availability.

Our Online Business Advisers are armed with further guidance and tips as well as information about how to avoid the main causes of cash flow problems.
Contact the HotSW Growth Hub for an information sheet on this topic – 03456 047 047


Adopt tight credit control procedures

This will help safeguard against Customers becoming insolvent and not being able to pay an invoice. Put procedures in place that map out the process of approving Customer credit and always operate your accounts in line with your terms of business. Even if the administrative side of your role as a small business owner is overwhelming, it is important to set aside time to carry out effective, prompt administrative procedures.

Our Business Advisers have guides on how to adopt tighter credit control procedures.

Check that customers are creditworthy

Make use of credit agencies, bank reference and trade references. We have further guidance issued by the Better Payment Practice Campaign on how to check a Customer’s credit worthiness.

Offer incentives for early payment

Can you afford to offer a discount to those Customers that pay within 1-2 weeks? You may find that your Customers are quicker to part with their money if there is a greater incentive to do so.

Make it easy for Customers to pay

We regularly receive enquiries from business owners who simply cannot get someone to pick up the phone, send an email or pay a bill. The solution is often easy. Do your Customers, or potential Customers, know what to do – are your contact details and payment details clearly stated on an invoice?

Consider allowing your Customers more payment options through secure online payment systems, like PayPal. Our Business Advisers can offer further information on the various ways a business can accept payment more easily.

Negotiate better credit terms with suppliers

Having cash flow problems ultimately boils down to having greater cash outflows than inflows. If your Customers expect a 30-day credit account, you may wish to also negotiate 30-day payment terms with your suppliers – negating the need for your outflowing bills to fall before your inflowing payment is expected.

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