With so much financial pressure on small businesses it is imperative that you have a cash flow management plan in place to help you through these troubled economic times. Late payments can be crippling in more ways than one.
Why a Cash Flow Management Plan is Vital to the Success of Your Small Business
With so much financial pressure on small businesses it is imperative that you have a cash flow management plan in place to help you through these troubled economic times.
Late payments can be crippling in more ways than one. If the problem is not addressed by setting up a method of prevention in the first place, serious problems will ensue; problems that will affect the profitability of your business, because you will be spending valuable time and resources chasing money and losing interest. And more worryingly, these problems could lead to difficulties obtaining credit.
Prevention is better than cure; make sure you have clear terms of business that set out your payment terms, and ensure you enforce those terms. Take action to collect any debts promptly so that customers realise they cannot take liberties.
Ensure invoices are sent out regularly; don't delay in sending them as soon as an order or job is completed.
Keep track of your invoicing and payments due: make sure you have a record of who to invoice and when and when their payment is due. Also, keep a record of how long individual customers take to pay so that next time you deal with them, you are ready to face any payment issues before problems arise.
And if you do not have the time to dedicate to managing a cash flow programme, outsource to a company that does. Your accountant will certainly be able to help you to develop a plan in place and may even be able to set the whole thing for you so that you are on with running your business and get the focus on the work side of things, while someone else takes care to get the most out of your business' profitability.
Lynn Watson is the Director of Office Assistants, a company certified by the Institute of Certified Bookkeepers. They offer small to medium businesses of all types the chance to cherry pick from a flexible range of services including bookkeeping; VAT; Payroll; CIS returns and general office services. The company has 20 years experience and pure expertise in streamlining systems and making substantial savings for all types of Essex and London businesses from sole traders upwards. For more information visit http://www.officeassistants.org.uk
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