You’ve all heard the saying “Cash is King” and this is really true at this time of the year. Although holidays beckon, there is also a period of light or no trading, during which leave entitlements and fixed overheads are still payable. It’s great to be busy in December in the run up, but the lifeblood of business is cash – so even if you are frantic in the period leading up to Christmas, it’s not much use if you are not getting paid!
A more focused saying would be “the sale isn’t made until the cash is in the bank”. And for this to happen business owners need to have good systems in place. Of course, it also helps to complete the work in a timely way and within the price range you agreed. After that, prompt invoicing is important; then a follow up call. Many business owners are not so keen on the phone call, but it is very good thing to do. You will find out earlier if there is a problem over something and you have time to address that before it goes stale or septic.
Further down the track, there might be a role for credit managers, either internal or external contractors. This is all part of keeping the lifeblood flowing during December and January.
If things go badly, you might need to contact us to do the debt collection – this process can take time, so we recommend getting in contact to discuss your options sooner rather than later to prevent your cashflow coming to a stop. The options available to you will depend on the circumstances. There are inexpensive tools that can help to recover debt in a timely manner such as a letter of demand for payment from us to prompt the debtor to make payment to avoid further action.
In summary, it is best to be proactive, talk to your creditors, to your solicitor and to your accountant, and if you need to, the bank! Wishing you a positive cash flow holiday break! Merry Christmas
