FINANCE
BY EDDI TAYLOR , PARTNER , AZETS
Cash – the greatest source of funding of them all
A GROWING AND EXPANDING BUSINESS NEEDS FRESH INJECTIONS OF FUNDING AND CAPITAL TO PROVIDE THE WORKING CAPITAL TO FACILITATE GROWTH . IT WAS ONCE SAID THAT ‘ THE EASIEST BUSINESS TO FUND IS ONE THAT ACTUALLY DOESN ’ T NEED FUNDING ’. WE THEREFORE NEED TO FOCUS INTERNALLY ON THE GREATEST SOURCE OF FUNDING OF THEM ALL – THE CASH GENERATED BY THE BUSINESS ITSELF . FURTHERMORE , THE SINGLE MOST IMPORTANT THING THAT ANY BUSINESS CAN FOCUS ON IS ENSURING THAT THE BUSINESS IS CASH GENERATIVE .
Accounts and business advisory services partner , Eddi Taylor , discusses six critical ways to tap into the greatest source of funding and to ensure that your business is cash generative .
1 . Issue your sales invoices as promptly as you can
As soon as your work has been completed , or the service has been provided , issue a sales invoice promptly , and ideally electronically . Make sure all invoices follow a template ; accuracy is important as errors can lead to delays in settlement . Ensure your customer data is up to date , take time to check names , addresses , invoice numbers , customer references , purchase order numbers , narratives , VAT and invoice totals are all accurate . A little care at this stage can pay huge dividends in terms of collecting the cash quickly .
2 . Have clearly set and well communicated payment terms
It ’ s important that your customers know what you are expecting from them in terms of payment . Ideally , set out your terms and conditions in a letter of engagement for your customers to sign , and have them included on your invoices and other documents . Be clear about what is being provided , how much it will cost , the project timeline , when payment is due , and what happens if payment is late . Clearly setting out your expectations will limit disputes and delays and will help you collect the cash promptly .
3 . Have a strong credit control function with robust procedures and protocols
Employ a strong credit controller who recognises the importance of using the latest technologies to improve the credit control process , who will chase every overdue payment , put poor payers on a stop list , and who won ’ t be afraid to outsource tricky debts to a collection agency . Good credit control will help you to get paid quicker which means you can pay your own suppliers quicker , avoid late payment charges , increase your own credit rating , and provide you with the cash to invest in the business .
4 . Develop strong relationships with your customers and suppliers
A good credit controller will forge strong relationships – a little rapport with those who pay goes a long way . Knowing the best people to contact is hugely important and a good credit controller won ’ t be afraid to push your invoice to the top of the list .
5 . Make sure your business and underlying transactions are profitable
If your underlying transactions are profitable , then with the right credit control , these transactions will generate cash and working capital . Use the latest cloud-based accounting solutions to manage and report your transactions and financial performance in a way that helps you ensure your business is profitable . Seamlessly sync this data with the latest cloud-based cash flow tools to ensure that this profitable performance is generating cash .
6 . Structure your tax affairs effectively
Smart , strategic tax planning helps ensure you are minimising the tax take on the profits and cash you are generating . Tax can be a complicated area so speaking to a trusted business advisor is critical to ensuring you remain compliant whilst maximising the positive effect of the cash generated by your business .
To discuss your business and cashflow or to discuss how to use technology to make your business cash generative , please get in touch .
T : 01227 454861 E : eddi . taylor @ azets . co . uk
Local offices : Ashford : 01233 629 255 / Canterbury : 01227 454 861 Maidstone : 01622 690 666 / Orpington : 01689 827 505 Sandwich : 01304 249 997
www . azets . co . uk
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