Your New Year’s Resolution: Better Cash Flow

Before Christmas I read an article about the beginnings of the accountancy profession (please, don’t judge my reading habits – if you are interested please read it here). It made an interesting point.  The earliest evidence of professional accountancy was around 8,000 BC.  On a clay tablet was written a transaction for a transfer of barley over 37 months.  Simple, nothing much to it. But what struck me is this: All accountancy and bookkeeping stems from the need to know how much people and businesses owe between each other.

And do you know what? I am bored of recording what is owed between businesses.  It’s time that we did more to solve the problem. We want to help to get things paid!

So this year we are focused on helping all our clients improve their cash flow.  And the first step is credit control.

This is such a big subject that I can’t do it justice in one blog post. But what I can do is summarise my experience, to help you begin to see why it is so important.

Would you lend your customer that money as a loan?

So many small businesses focus on the work they do, after all that is the bit that most business owners know best,  how to do the job.  And once the job is complete raise an invoice,  Job done.  But where is the follow up to make sure they get paid?  Too often I meet people who are unaware of who owes them money, and how much is owed. Too many times I have seen people working themselves to the bone for clients/customers who still haven’t paid them for many months’ worth of work – but because they haven’t looked at their debtors list, they can’t ignore this. They chase the ‘sale’, they focus on raising an invoice for the work done, but they do not chase the payment, until it’s too late.

The old saying ‘Turnover is Vanity, Profit is Sanity and Cash is Reality’ is so true.  If you wouldn’t trust someone enough to lend them money, then why would you trust them enough to keep working for them when they already owe you money?

Of course, I know, it isn’t that simple.  If everyone only did work for immediate payment, the economy and plenty of small businesses would collapse.  So how do you make sure that you get paid without jeopardising your relationship with your customers?

The answer is to have a solid and consistent process.

It’s not rocket science and it’s not mind-blowing, but putting a credit control process in place will give you more money!

There are some simple by key plans we have helped people to implement, in order to solve cash problems:

1. Make sure the invoices are clear
2. Set out a regular rhythm for your credit control process
3. Have a robust bookkeeping system so that you only chase true debts!
4. Automate as much of this process as possible
5. Set a policy for how you escalate the implication for non-payers

We have helped many clients through this process, but we’ve also gone through it ourselves, implementing substantial changes in our own internal processes. In the course of this, we have not only increased our knowledge and experience, but forged important relationships with organisations like Chaser, the award winning credit control software. This means that we can still help you with your cash collection, but we can do it in the most efficient manner.

Talk to us

This year we want to talk to as many people as possible to help with the headache of cash collection.  If you, or someone you know is struggling because they’re not being paid, then give us a call so that we can work out a plan of action to help you.

What we can do:

1. Check over what you already to to improve it
2. Set up a credit control system from scratch
3. Automate your system so that it takes as little time and investment to get the most cash collected

If you want a more bite-sized approach to helping your cash flow then why not start with our session “Cash Collection Review”. To find out more and book in your session, complete the form below.