Improving the cash flow of you business

I have dealt with many small businesses over the years and the main factor in determing if the business will succeed is their ablity to get paid for their goods or services. To begin you have to have a good business plan and a good product or service to sell but at the end of the day all the sales in the world means nothing if you can not get paid for your sales. This might seem obvious but it is in fact one of the main reasons for a business to fail. This is a mistake I see repeated constantly by new set up businesses.
When you set up in business you have to realize that you are no longer a mechanic or a sales man or an accountant. In fact you are now a business owner so you have to be all these things rolled into one. Of course as the business builds you delegate some of these functions but ultimately you have to retain some control over all the functions of the business.
Typically what happens is the new business goes out and implements their business plan with a lot of vigor and produce a large amount of sales, however how do you get paid for these sales. Sales or debtors control should focus on the following
(1) Ideally get paid at point of sale, so that when you provide the service or goods that the customer pays you for the sale.
(2) Part payments in advance and final payment on completion. If a sale involves a large outlay by you on parts and products then you should insist on part payment in advance . at least enough to cover the cost of the materials you have to buy for the product . Remember if the customer is going to pay you then they will have the money at start of project to pay if they don't then do you really have a hope of getting paid later on
(3) Credit: Often in business to business transactions you have to give credit. If you do this then do it in a controlled and systematic manner
     (a) Make them fill out a credit application form with all their contact details and phone numbers and defining exactly the terms off credit, such as the length of credit , payment method, state that the ownership of products only pass when payment is made, contact me on fmcgivney@live.com for a standard form we can provide to you for this for a one of fee.
      (b) Send out invoices to customer at the point at which they receive the good or service so that the term of credit starts as early as possible
       (c) Every month send out a statement to each debtor showing them how much they owe and how old is the debt
       (d) Ring the debtor for payment. Do not be afraid to do this. You have done the work and you deserve to be paid so ensure you ask for payment
(4) Have your payment methods clearly set out On you invoice show details for bank transfers, have your bank account to lodge cash and cheques. A major problem up until now is taking credit card payments. Hover a new company  allows you to take worldwide payments from credit cards using your iphone or smart phone contact to set this up  Sumup Credit Card Reader for Smart Phones
(5) Once you have the money in implement sound financial control so that you have enough money to kep the business operating into the future. So be wise in what you buy.

If you have any queries contact Frank McGivney , Frank McGivney & Co. Chartered Management Accountants, 38 Cherryhill Court, Kells, Co Meath Ireland fmcgivney@live.com