A lack of cash is the number one killer of small businesses and the statement “turnover is vanity, profit is sanity, but cash is reality,” has never been more true than it is today. That’s because in a really tough economy, customers will pay you even more slowly and suppliers will want you to pay them more quickly.
The following 3 step plan contains some strategies that we have helped our clients put in place, which have seen them achieve massively improved cash flow. By following these ideas, you will be able to manage the tough times and when the good times return, you’ll have all the checks and controls in place to be one step ahead of your competitors.
1. Run a credit check on any new client. It’s too easy to do some work for a new customer, only to find out too late that they can’t actually afford to pay you. Make as many checks up front as you can and ask for a deposit if you are in any doubt.
2. Be really ruthless about credit control – Too many companies find out too late that a client can’t or won’t pay. Be proactive and check with the client that the have received the invoice and they have no issues. Then chase a week before the due date to confirm when payment will be received. Make it easier for them to pay by offering a BACS service.
3. Keep cash flow forecast current so you know your company’s financial position at any given time. You don’t need expensive software, just a simple spreadsheet where you can list all expected income from sales etc and and then all outgoings that you’ll need to make over the next 12 months like salarys, rent, PAYE etc.
By following this advice, our clients have improved their cashflow and ridden out some tough times.
Learn more about improving your cash flow? Visit Accountancy Extra for the best accountants in Leeds and the best accountants in Halifax.



