Thriving in recession - Cash is King checklist
Check your cash control processes against the following:
- Run a weekly cash flow forecast and use it to see potential problems in time to act.
- Understand the impact on cashflow of the loss of one of your major customers.
- Tighten payment terms. If possible get stage payments or deposits up front.
- Chase bills before they are due. Install a process where the top 20% of invoices by value get a phone call a week before payment is due to eliminate issues and reasons for non-payment.
- Profile customers and understand who pays on time and who always needs chasing - then apply rule 2.
- Look out for changes in behaviour, e.g. a customer who normally pays in 30 days is drifting out to 45+.
- Run credit checks on new customers - and existing customers if you have any concerns.
- Apply the 80:20 rule and focus cash collection on the big amounts and the problem accounts.
- Negotiate an overdraft or other funding facility well before you need it.
- Determine a policy for how to deal with late payers - and stick to it. Don't be afraid to place customers ‘on hold' if they haven't paid outstanding bills.
- Never let any customer - regardless of their size and importance - accumulate a debt to you that would really damage your business if it wasn't paid.
- Consider giving a small discount for very prompt payment.
- Don't pay your own suppliers invoices until necessary.
- In certain circumstances suppliers to whom you are important will be prepared to help you through periods of financial difficulty - handle the negotiations carefully.
For more information contact Mike Robson on 0207 100 1233 or mike.robson@azurepartners.co.uk
Azure Partners work alongside the Boards of progressive companies from their earliest stages through growth and maturity to preparing them for sale or flotation. We have the skills, the commercial experience and the necessary knowledge to significantly enhance the value of your business