Keep Business Cash Flowing
Cash is the most important financial commodity that keeps the business wheels rolling. Cash is the life-blood of any business and is vital for survival, sustainability, investment and growth. We need cash for a whole variety of things, from paying staff, suppliers and bills, buying equipment, servicing loans and paying taxes.
Three things to remember to help keep that business cash flow moving is summed up as PIC
Have a robust, practical and effective credit control policy. This includes who and how you grant credit facilities to, your payment terms, and how you deal with late payments.
Make sure your terms and conditions are clearly communicated to customers and clients at the outset, treat it as part and parcel of an agreed way of working.
It is vital to know who owes you money, when the customer should be paying and when it is overdue. We should also monitor cash flow, and ideally prepare a forecast cash statement on a rolling twelve-month basis. Our cash flow forecast should show us by month
- WHEN cash comes in and WHEN cash goes out
- Surpluses or shortfalls of cash
Cloud based accounting packages like Xero, will:
- Keep track of how much money is owed and when payments are due
- Produce a variety of customer reports, showing things like what invoices are outstanding, how long they have been outstanding for and sales by customer
- Give you and your business up-to-date and current financial information on profitability and cash flow
- Keep accurate up-to-date records of every invoice and transaction
Keeping the business cash flowing is important and managing the credit you give customers is critical.
- Keep on top of late payments, and don’t let things slide.
- Send reminder invoices promptly and follow up with a phone call if needed.
- Set reminders to be sent out at the intervals that you require
- Add notes to a customer account e.g. if they’ve requested a payment plan and the amount, they have agreed to pay
Thanks for Reading
Pro Active Resolutions, Your Business Friend and Xero Advisors
Get in touch to see where we can help you and your Business keep that cash rolling in and so much more