CASH - THE GREATEST SOURCE OF FUNDING OF THEM ALL FOR SMES

Azets Accounts and Business Advisory Services Partner, Gareth Magee, discusses six critical ways to tap into the greatest source of funding of them all, cash, and to ensure that your business is cash-generative.

1. Issue your sales invoices as promptly as possible

As soon as your work has been completed, or the service has been provided, issue a sales invoice as promptly as possible, and ideally electronically.

Make sure all invoices follow a template. Accuracy is important as errors can lead to delays in settlement. Ensure your customer data is up-to-date, take time to check names, addresses, invoice numbers, customer references, purchase order numbers, narratives, VAT and invoice totals are all accurate.

2. Have clearly set and wellcommunicated payment terms

It’s important your customers know what you are expecting from them

in terms of payment. Ideally, set out your terms and conditions in a letter of engagement for your customers to sign, and have the terms and conditions included on your invoices

and other documents. Clearly setting out expectations will limit disputes and delays and will help to collect the cash promptly.

3. Have a strong credit control function with robust procedures

Employ a strong credit controller who recognises the importance of using the latest technologies to improve the credit control process, who will chase every overdue payment, who will put poor payers on a stop list and who won’t be afraid to outsource tricky debts to a collection agency. Good credit control will help you to get paid quicker which means you can pay your own suppliers quicker, avoid late payment charges, increase your own credit rating, and provide you with the cash to invest in the business.

4. Develop strong relationships with your customers & suppliers

A good credit controller will forge strong relationships – a little rapport with those who pay goes a long way. Knowing the best people to contact is hugely important and a good credit

controller won’t be afraid to push your invoice to the top of the list. 5. Make sure your business and

transactions are profitable

It perhaps sounds obvious, but the fundamental building block in cash generation is profit. If your underlying transactions are profitable, then with the right credit control, these transactions will generate cash and working capital. Use the latest cloud-based accounting solutions to manage and report your transactions and financial performance. 6. Structure your tax affairs effectively Smart, strategic tax planning helps ensure you are minimising the tax take on the profits and cash you are generating. Tax can be a complicated area so speaking to a trusted business advisor is critical to ensuring you remain compliant whilst maximising the positive effect of the cash generated by your business.