Page 4 - The 7 Biggest Mistakes Trades and Builders Unwittingly Make

3 3 Having no system to

manage cash flow

This partly relates to the previous point i.e. by has a negative effect on the relationship, and it
not having someone dedicated to keeping on makes you appear as a ‘one-man band’.
top of invoicing and the chasing of payments,
this can often lead to poor cash flow. However If the customer has still not paid once the in-
there are other things to consider when man- voice is more than 21 days overdue, it is im-
aging cash flow. perative that this email informs the customer
of the next steps, which will be to potentially
The first is to ensure that you have up to date issue civil proceedings.
and relevant terms and conditions in place.
This immediately improves your credibility and It is a good idea to ensure that all the templates
businesses are more likely to pay you first if for the chasing of overdue invoices are correct
they can see that you have systems and pro- from a legal standpoint and protect you should
cesses in place; you appear more professional. the case go further. By being a member of the
Federation of Small Businesses, you have ac-
Secondly ensure that you have something in cess to all the templates required in addition
place to chase outstanding payments; e.g. an to standard terms and conditions. Please go to
email to go out once the payment is 7 days, 14 http://www.fsb.org.uk/ for more information.
days and 21 days overdue. By using account-
ing software such as Xero https://www.xero. Finally if you are in the unfortunate place of
com/uk/ it is possible to raise invoices and having to issue civil proceedings, at this point
automate the whole process of emailing cus- it is best to hand it over to a debt collector.
tomers to inform them their invoice is overdue. They will manage the whole process from this
point for a small percentage of the invoice. For
It is also a good idea for someone other than example PRMS Ltd, which you can read more
the business owner i.e. the bookkeeper or ad- about here http://www.prmsltd.co.uk/
min assistant to put in a friendly call, just to
check that they know the payment is overdue TOP TIP – Ensure you have terms and con-
and kindly ask when they can expect payment. ditions in place, and the correct templates for
It should never be the business owner, as it non-payments.

EXERCISE

Which of the processes above do you have in place?

What steps could you take to improve cash flow?

4 Alison Warner The 7 Biggest Mistakes Trades and Builders Unwittingly Make http://www.buildandgrow.org.uk/