Read the following article from SmallBusiness.co.uk about how a small business can maintain its cash flow. Answer the accompanying questions.
TOP TIPS TO MAINTAIN A HEALTHY CASH FLOW AND KEEP GROWING
Your customers can’t get enough of your products or services, you want to embrace growth and take on more projects. ‘Cash is king’ and is the lifeline of all businesses. But there’s a problem. The long payment terms set out by your customers mean that cash flow is tight. So, how can you manage your cash flow better?
We’ve put together our top tips for businesses to maintain healthy cash flow and keep growing. 1. We learned about cash flow in chapter 18. Explain what the term means.
Be aware of customer payment practices You’ll be able to manage the payment terms of your customers better if you plan. Ask questions and do research before you strike up new trading relationships. Even without long payment terms in the picture, all companies have different payment habits. Maybe your customer pays everything on the same day each month. Perhaps it’s on an ad-hoc basis, which poses different challenges. You need to know.
2. Which of the documents described in this chapter can help a business to keep track of customer payments?
Prompt invoicing
It seems like a no-brainer. If you don’t invoice your customers you can’t maintain your cash flow – but it’s easy to fall behind on issuing invoices when you’re already being pulled in a lot of directions, and that just causes further payment delay.
Make sure one person takes ownership of invoicing. If you’re a small business it might not be somebody’s entire job but set aside some time every week to prepare and send invoices.
3. Why is it important to send out invoices quickly?
