Cashflow is the very lifeblood of a business. It has to be remembered that poor management of cash flow can lead to business failure.
Businesses can implement the following measures to manage cash flow effectively:
- Set a credit management policy (e.g. make a credit check on each new customer).
- Set a minimum order level for credit sales.
- Set a credit limit for each new customer.
- Perform regular credit checks on your main customers.
- Use fully documented terms of trade.
- Ensure terms of trade specify credit terms.
- Give each customer a unique account number.
- Specify the most appropriate payment method.
- Chase overdue payments within a week of them being due.
Remember cash flow is king for small businesses and the self employed.