I attended an FSB event this week and we had a group discussion on managing cash flow. I heard some new tips and it reminded me of some I already know. Here they are. Why is this important? You can have a profitable business in turnover terms but if you cannot pay your employees, or suppliers because you haven’t received payment, you will be trading illegally should you try to do so. Cash flow is the main cause of businesses going under. So, what can you do?
1. Understand your customer’s payment cycle. If their payment run is mid-month and you invoice at the end of the month – you will have longer to wait.
2. Break your invoices down into each product or service. This way you can invoice faster as each element is delivered and, should there be an enquiry, the time spent solving the query will not hold up the other payments.
3. Look at the terms. Can you get agreement to pre-payment before the service starts? Can you set up direct debit stage payments?
4. You do not have to accept the terms and conditions of your customer. If you write and say your terms are “14 days” and they respond with “our terms are 30 days”. The legal status is that the last written statement applies. So, write back and say “our terms are 14 days” – as many times as needed. Then, if there are problems later, you have the legal right on your side. Not a situation you want but there are organisations that can help with this type of dispute if it should arise – at sensible rates.
What works for you?
The Week: On Monday I attended a meeting relating to my Non-Exec Director role and put together a Board Development Framework for delivery next week. Tuesday evening was spent at the FSB networking evening which was both well attended and very informative. I spent Wednesday developing the programme for the BigE Enterprise Workshops at Essex University which we are launching on the 14th November. I also received the photographs from my presentation at Essex University a week ago. Thursday saw me finalising the next two Highflyingdivas and Leadership Forum events and Friday coaching clients. .
Reading for the week: We were treated to a fantastic presentation from Mike Southon at the FSB week and it reminded me of his best-selling book which deserves another recommendation. The Beermat Entrepreneur.
Lighter Reflections. Is it just my men who seem to have quirky and puzzling habits, behaviours and outlooks? Guy went off to Boarding School with a Pay-as-you-go mobile phone. He managed to spend nearly £50 on calls and texts back home during the first 3 weeks. Remember that lovely poem “hello mother, hello father……”? We logically decided to put him on a phone contract. We had to buy a new phone, managing to avoid his pleas for an iphone, as his current phone wasn’t “Sim-free”,. We then signed up for unlimited texts and calls. How many texts have we received in his first week back? – 3. How many phone calls? – you guessed it – 0. I have also had a couple of endearing verbal responses from James. I was trying on a new top and moaned “I can’t fit it on because I’ve got so fat!”. Response – “No, you’re not fat – just overweight”. Then as we walked to the local pub,, I took hold of his hand to hear him saying “Oh, did you forget your gloves then?”. He does like living dangerously!
Future Forum Dates:
Highflyingdivas, London, evening 15th hosted by The Home Office
Leadership Forum, Colchester, a.m 22nd November
Highflyingdivas, Colchester, p.m. 6th December