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Help and advice for individuals and businesses across Northampton and Daventry

 

[22.08.2019]

Cash flow – are you being paid promptly?

Have they paid us? This is a critical question every business needs to ask and the getting paid for your work is vital to a healthy cash flow. Here are some tips on how to keep the cash flowing in.

KNOW YOUR CUSTOMER

If you are advancing credit to your customers, remember to carry out the necessary appropriate checks so that you are satisfied they have a means of paying you for the goods, work or services that you are providing.

GET YOUR INVOICE IN QUICKLY 

It’s easy to forget to invoice clients in a timely fashion, but it inevitably will lead to a delay in the ultimate payment date. So be prompt and don’t let things slip. This can be a particular issue if you’re an owner-manager, who gets bogged down in the day-to-day work.

USE TECHNOLOGY 

If you invoice electronically, use software which allows you to see whether your client has opened and viewed your invoice. It’s a great way of keeping on top of payments.

SUBMIT THE RIGHT DOCUMENTATION 

Make sure you reference the relevant purchase orders and, if applicable, customer approved documentation, as there’s then much less wriggle room for your customer. And less chance they’ll tell you to go back and resubmit your invoice. You can even attach your paperwork to the invoice in a cloud platform such as Xero and ask your client to approve it.

INTRODUCE PROPER CREDIT CONTROL 

If your customers haven’t paid you within the time you stipulated, I.e. in accordance with your terms, which may be 30 days for example, then you need to know and have a system to follow up any outstanding amounts.

BE CONFIDENT 

Some businesses are reluctant to chase an invoice because of the potential repercussions and effects on the relationship. But how good can that relationship really be if you’re not actually getting paid?

PUT SOMEONE IN CHARGE 

Businesses which get paid promptly are often those with dedicated staff responsible for chasing debts. As soon as your company reaches a size to justify it, you may well find that the investment in staff makes a real difference.

CONSIDER INVOICE DISCOUNTING FACILITIES

These are not right for everybody, so consult your accountant. But there are options out there in which funders may agree to pay you, say, 85% of the debt you’re owed. Banks prefer these types of facilities to overdrafts as they have security over the debtors. It may also help you maintain a regular cash flow in from your sales activity. Some funders provide integration with platforms, such as Xero, which make it easier to administer.

We would be very happy to help you and your business with this. Your cash flow generally or any other area we can. Please contact us and see ways we can help at Business advice from DNG.

Andrew Picker

 

 

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