The Business Bulletin
Maintaining healthy cashflow Cash is king. knowledge is power. You wouldn’t believe the number of business owners we meet who misunderstand the concept of cashflow. They often confuse it with turnover.
■ bank transfer
Surely, if your business is busy and
The tradition of 14, 30 or 60 days
you’re sending out loads of invoices,
goes back to the days of supplying
then your cashflow will be great.
goods for re-sale, otherwise known
That money will just flow in. Hmmm
as retail. It made sense to allow the
■ via Direct Debit
… are you sure? Think again. What if
retailer some time to move some of
your lovely, friendly customers aren’t
the stock through before demanding
■ processing card payments
quite so lovely and friendly when it
payment. But look at your own
comes to paying their bills? What
sector. Surely, if your client reaps
happens when it’s time for you to
instant benefit from your goods
pay your bills – from your suppliers
or services, why give them time to
or utility companies … and there’s no
pay, just because it’s the tradition?
money in the bank?
Provided they know from the outset
When you lie awake at night, wondering when (or if even) those customer invoices will be paid, that’s when you’ll realise what cashflow is all about … and why it’s so important.
Here are few tips to keep the cash coming in
what your terms are, they’ll have no
that you offer options. Make sure
move on the payment terms without losing any margin.
clients. Do you have a repeat late payment offender on your books? Then you could try shortening your payment period.
invoices within 30 days, but you’ve allow all your customers a generous
Make it easy for your clients
60 days.
If you make your payment terms easy, you’re more likely to be paid
standard payment terms. Do you
on time. Offer your clients a range of
really need to give any credit at all?
ways to pay –
14 | Issue 1 – Finance
your clients will appreciate the fact
to accept your prices, you can then
based on what you know about your
Think carefully about your
These might not all suit you, but
If your new client steadfastly refuses
When setting up contracts for your
if you agree to pay your suppliers’
■ Paypal
have something to negotiate with.
Try setting your payment terms
suppliers. Imagine the trouble ahead
online
for immediate payment, you now
Set your terms … clearly
terms you’ve agreed with your own
over the phone, in person or
cause to complain. Also, by asking
Know your client
clients, keep in mind the payment
■ by cheque
Matthew Goude Zinc Books Matthew is a chartered accountant and tax advisor based in Northampton. By taking the time to understand client’s short and long term objectives, Matt is able to provide solutions and advice to help meet those objectives. Zincbooks has invested heavily in the latest accounting software in order to make clients’ lives easier and to give them time back. 07498 202281 info@zincbooks.co.uk zincbooks.co.uk
