A quarter of Britain’s small and medium sized
firms regard the state of the economy as their
biggest current concern, and nearly a third
describe the present situation as a fully blown
recession, according to a new poll by the Orange
SMS Business Jury. Overhead costs (23%) and
fuel costs (17%) are the other major concerns,
suggesting that businesses are increasingly
worried about the need to economise.
Keeping a strong and steady cash flow
through a business is critical at all times,
but particularly during periods of market
uncertainty. Here is a checklist of some
basics to help you improve your everyday
cash flow:
- Get paid more quickly – Ask your customers
to pay sooner or ask for full/part payment
in advance. You could also offer a discount
if they pay by an agreed date.
- Avoid late payments and non-payments
– Agree payment terms in writing and set
them out clearly on all invoices. Issue
invoices promptly and carry out credit
checks on potential customers. Consider
including a retention of title clause in your
contracts for the sale of goods.
- Be alert to customers changing their
behaviour – If customers start post-dating
cheques or become difficult to get hold of.
- Chase debts – Be prompt and systematic in chasing debts and be
firm when you ask for payment.
- Seek extended credit terms – If you are in a strong negotiating
position, ask your suppliers to give you extended credit terms.
- Consider factoring – Debt factoring may be one way of getting cash
into your business quickly. This involves selling your invoices to a
debt factoring company against which you can draw loans.
Once you have this structure in place, you can use cash flow
forecasting to identify problems, avoid cash crises and help make
important business decisions.
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