(And see how they do it at the Bank of England with a virtual tour!) By John Clarke, Nwes Business Trainer
Here are my top ten Cash Flow tips to help your business thrive.
1. Manage the cash
Just keeping a careful check on what is actually going on is sometimes one of the easiest methods of dealing with cash flow. With internet banking and banking apps, it has never been easier to keep an eye on your bank balance.
Also, keep close to who owes you money and, of course, when monies you owe are due to be paid. Think ahead and try to identify potential problems early.
Top tip – try and obtain a Bank Overdraft when you don’t need it – it’s often easier to negotiate at that time. Its then there when you do need it!
2. Invoice customers promptly
Send out invoices on time. Make sure you set aside time to do this regularly and give it priority.
3. Make it easy for people to pay you
Try and offer a range of payment methods so your customers can choose. Direct to Bank transfers are often the best and easiest method, but don’t forget cash, cheques, card payments and money transfer services. Make sure every invoice includes a clear ‘due by’ date. Make sure to include your account details!
4. Consider discounts for prompt/early payment
People are always keen to save money so such discounts will often see invoices settled early.
5. Use business charge cards
Charge cards can give you up to 60 days credit from date of purchase to the time when the card balance needs to be settled.
6. Make sure you have a proper credit policy
Decide how much credit you are able to offer and ask for deposits when appropriate (especially from new customers).
7. Manage overdue payments
Foster a relationship with the finance departments of your customers. A friendly phone call reminder can sometimes bring results. Also make sure you have a more formal method to pursue those who don’t respond. Ultimately a threat of legal action may be necessary although, in order to preserve the relationship, this should be a last resort. However, don’t be too soft either… you can afford to lose customers who don’t pay.
8. Manage your own payments
Pay invoices you receive on the day they are due. Earlier payments can put pressure on your bank account. Preserve your own credit status and relationships by settling on time.
9. Extend payment times
See if you can extend your existing credit terms. This is a discussion which can be easier when placing new or follow on orders.
10. Get better at managing your stock
Stock uses up cash so stay in control and make sure you are as efficient as you can be without compromising customer service.
See how the Bank of England keeps the cash coming in!
For more business advice, contact Nwes www.nwes.org.uk