Working Capital

In these difficult times, the following points are intended to help maintain a fluid movement of cash into your business:

1. Invoicing

• Issue invoices more regularly and consider invoicing upfront or sending interim bills.
• Look at offering discounts, for example 5% if payment is made within 7 days to bring forward receipt of the money.
• If taking on any new customers ensure you use a credit check report for example, Experian.

2. Debt Collection

• If you use a cloud-based accounting package, look at the possibility of automating your debt collection system, for example Chaser.
• If you have debts beyond your payment terms look at placing the invoice   with a debt collection company.
• Look at financing your debtors using invoice discounting.
• If you have individual large sum invoices look at single invoice finance.
• If customers are struggling to pay be flexible and allow a payment plan by way of monthly direct debit.

3. Stock

• Look at your various stock lines and operate a just in/just out system.

4. Payment to Creditors

• Contact your suppliers to discuss extending terms or agreeing a payment plan.
• If offered an early payment discount by individual suppliers, look at settling their invoices first.

5. Capital Expenditure

• If considering purchasing capital equipment, investigate leasing the equipment rather than purchasing.
• Purchase any new equipment via a hire purchase agreement.
• Extend the term of the hire purchase agreement to reduce the monthly payments.

6. Cash

• Transfer any excess cash into a deposit account.
• Look at other investment opportunities whereby you still have quick  access to the funds if required.