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How to Improve Your Cash Flow

Apr 07, 2014

Poor cash flow is the biggest reason businesses cease trading, so we have set out below 10 key tips on avoiding and chasing late payments by Gareth Underwood of Sage Software:

  1. Know your customers - run online credit checks on new and existing customers
  2. Be clear about your payment terms - include them on every invoice along with late payment     penalties
  3. Avoid cheques - encourage electronic transfer or Direct Debit to improve cash flow
  4. Choose the right people for your credit control team
  5. Make a courtesy call to customers before payment is due to iron out any problems or issues
  6. Start chasing late payments as soon as they are a day or two overdue
  7. Let your customers know that you will claim interest on late payments
  8. If a customer has a large bill you can offer to accept  payment in two or more installments          
  9. If you haven’t received payment, don’t let the problem escalate,  take action
  10. As a last resort use a debt collection agency

Business are often reluctant to appear heavy handed when debt chasing as they fear that they will lose future custom if they are too aggressive when chasing late payment but it is important to keep control of the situation so as to recognise a problem and deal with it  at an early stage.

 Do not hesitate to stop supplying  goods to a customer if payment is delayed beyond the usual terms or offer them  a cash on delivery basis until the account is brought up to date, do not let a small debt turn a large one.



Alice Morwood-Leyland

Comapny Secretary


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