Cash flow management tips for all businesses. If you need advice contact Montpelier at business@montpeliergroup.com

1. Cash flow management tips
Customers
 Credit check all new customers and only offer credit terms to those with a good history.
 Don’t offer over the top credit terms i.e. 90 days when your competitors offer 60 or 30.
 If possible negotiate stage payments, deposits up front or for work to be completed on
retainer.
 Raise invoices as soon as the work is done.
 Make sure the due date for payment of the invoice is clearly indicated on all invoices.
 Make sure you clearly state you state your payment terms and that you will charge interest
and statutory costs for late payment and collection charges.
 Investigate and resolve invoice disputes as soon as possible.
 Rather than chase invoices when they are late why not remind customers a week in
advance that payment is due.
 To encourage customers to pay early offer a settlement discount of say 5% for payment
within 7 days (or as appropriate to your credit terms). Not all customers will take advantage
of the discount but you get the benefit that you can charge a lower amount of VAT!
 Encourage customers to pay electronically by BACS, DD or Paypal etc rather than by
cheque.
 If a customer is late in paying don’t do anymore work for them and put into action your bad
debt policy. Chase the amount due, raise an invoice for interest and costs on the debt, put
the customer on stop.
Suppliers
 Try to negotiate credit terms, if possible, with all suppliers. Ideally these should match what
you offer customers.
 Only pay invoices when you need to, but don’t be late as this could damage your credit
rating and supplies into your business.
 Only take advantage of discounts if they are worthwhile.
Other options
 Factoring/invoice discounting.
 Credit insurance.
 Short term finance.
And finally, if you have a surplus of cash, invest it wisely to gain the maximum return before you
need it again. A good cash flow forecast, regularly updated, will help you to maximise the benefits.
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