This was a regular phrase used my by former Financial Management tutor, John Congram, during my days at Thames Valley University, Berkshire, UK. 20 years on, it’s importance to business is still clear in my mind.
Never has this asset been more important to small business than it is now with restrictions on bank lending, increasing pressure from trade creditors, declining markets & delayed payment form debtors.
There is no point in making a sale unless you can ensure payment!
The beginning of the year is a good time to review your complete sales/debtors system. If you have not done so already I would urge a review of the following key areas:
a. credit acceptance procedures and credit limits
b. consider reducing your payment days from the accepted ‘norm’ of 30 days
c. send statements to customers on a regular basis
d. follow up with increasing strength for those debtors who are late payers
e. have legal back-up in place for those customers where other measures have failed
f. if you have a sales/debtors system in place keep to it and you will see an improvement in your cash balance
g. consider updating your accounting software
h. seek the advice of your Chartered Certified Accountant! Contact O’Mahony Donnelly
Subscribe in a Reader
