1. Credit terms
Pay suppliers on time (not early or late) and ask for credit terms once you are up and running – essentially giving your business an interest free loan.
2. Review suppliers regularly
Check to see if you are getting the best deal and ask for discounts for early payment or bulk orders.
3. Late payments
If you need to pay late, communicate with the supplier early and set up an agreed payment plan. Get the plan in writing.
4. Payment terms
Make payment terms clear to new customers before you process their order – and put this in writing.
5. Invoice design
Include all your banking details on your invoices and ensure payment terms are clear.
6. Credit checks
Do a credit check on all new customers.
7. Deposits and progressive payments
For larger jobs ask for deposits upfront and progressive payments at various stages of the job to keep cash coming in and reduce the risk of not getting paid for work performed.
8. Non-paying customers
Offer a payment plan to clear the debt – some cash coming in is better than not being paid at all.
9. Invoice early
Send the invoice as soon as the job is done.
10. Ageing debtor reports
Review your ageing debtor report to identify slow paying customers and to identify potential problems before they get out of hand.
11. Friendly reminders
Phone or email early if payment terms have been exceeded. If they are late payers with all their suppliers, it shouldn’t be long before they decide it is easier to pay you first.
12. Profit margin
Identify which items make you the most profit and focus your time and money on those products.
13. Stock turnaround
List all slow moving and obsolete stock and work out a plan to move this stock as quickly as possible. Use this cash to buy stock that sells faster.
14. Find a simple cashflow forecast template and use it. It will help to identify times where more money is leaving the business than is coming in.