Business Monitor This month, marketing expert Paul Clapham, details how to get your cash flow in order.

ash flow forecasting is not a barrel of laughs. Equally, the activities you need to undertake to ensure that your forecast has a chance of being real are dull.

Get your cash flow straight C

Plenty of accountants make a shamefully good living for not much because the rest of us would rather pitch for business than get the books tidy. If your business has reached a size where you can afford, indeed need, a full-time accounts person congratulations! Much of the following will already be in place but maybe not all – even experts in this field get lazy.


Start with a cash flow mindset: it’s critically important so it should be up there top and centre in your thinking. Agreeing payment terms with a new client is almost as important as closing the sale. By the way, this isn’t needy, it’s professional. I recommend delivering the first invoice by hand. If there’s a problem you find out immediately and more important you meet and establish rapport with the person who’s going to write and send the cheque.

Don’t put it off. This is good advice for all aspects of business, but it’s essential with cash flow. The minute a job is completed you invoice it – that’s when your 30 days before you get paid start. If you put off invoicing until the day you always do your admin, you are shooting yourself in the foot. There’s a real feel good factor in this. If you get your invoicing up to date, you will go home a happy bunny and stay happy when you keep it up to date.

I refer above to 30 days credit. This might be standard practice but it doesn’t have to be automatic. Especially where a supplier isn’t giving you 30 days, your customer shouldn’t get it either. Of course, a thumping big mark-up might make you more tolerant.

Chasing payment

So far so nice and easy. The part of cash flow that everybody hates is chasing payment. If it makes you feel like a needy cheapskate, stop! Quite simply it shouldn’t. You did the work on time to the required spec at the price you agreed. The customer’s part of the deal

| 22 | September 2021

is to pay on time. That really should not need saying but sadly it does. The truth is that we are particularly bad in this respect in the UK.

I would have to say that a business which doesn’t expect to have outstanding accounts is not being realistic. It happens: people die, they go bust, they refuse to pay for ludicrous reasons. As with invoicing, so with chasing: do it on the due date. You will probably have to chase the same miscreants each month – it’s the price of doing business. If you can build into your invoice the cost of waiting for payment, do so but expect to lose a client if he works out he’s being charged for being slow. Accountants, incidentally, will recommend that you phone before the due date to ask if payment will be made. To my eye this does smack of desperation, so I wouldn’t do it. Anyway, accountants aren’t world famous at following their own advice, or even necessarily giving good advice. At the stage of addressing your need to phone clients and ask for money, you are very likely to think, ‘can’t somebody else do this for me?’. The answer, of course is yes. A freelance accounts manager who comes in once a week for a limited time and chases up Johnny Won’t Pay, susses out Johnny Can’t Pay and generally gets your hot hands on that which is owed sounds wonderful, no?

If you can find someone affordable who will actually chase outstandings rather than give you a list of completed phone calls, good luck. This is definitely a case of choose someone recommended to you for achieving just that. The good ones aren’t cheap. Which may decide you to bite the bullet and do it yourself.

What to do

If someone is digging his heels in and you are confident, you’re right, what do you do? A trail of phone calls emails and snail mail might work, but don’t bet the house on it. Visit the miscreant with all the relevant paperwork. If you book a meeting, don’t expect him to be in when you arrive. So just turn up. Yes, it’s rude but not as rude as failing to pay your bills.

Threaten him with the small claims court and follow through if he still fails. Actually take him to court if the bill is big enough to justify the investment of time and money. You will probably have been offered debt collection services. They might be good but I’d bet they are good at doing what you’ve already done. I’d also be deeply concerned about them applying aggressive or even strong arm tactics and getting you a very bad rep. (I know someone who made this mistake – avoid).

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