Cash flow #1 for small business
In the first week of 2017, we have had a run of small business owners wanting information on debt collection and cash flow issues.
Small Business Commissioner David Eaton, says cash flow is king in the world of small business but many busy business owners run into trouble with slow payers and bad debts.
“There are important measures that small business owners can put in place to avoid problems with late or non-payment of debts,” Mr Eaton said.
“Having minimal exposure to debt in the first place is good financial practice for any business, and documented procedures and systems will help keep track of cash flow and control of finances.”
Small business owners should be upfront with their terms and conditions to ensure customers understand when and how payment for products and services should be made.
“Always include payment terms on your invoices. Payment terms for customers should be shorter than those agreed with your suppliers,” Mr Eaton said.
“In Australia, payment terms are considered part of a sales contract and operate under contract law, therefore failure to comply with agreed payment terms is a breach of contract.
“Ensure you invoice promptly, monitor your debtors closely and follow up on overdue payments immediately. Don’t allow customers to exceed their credit limits,” Mr Eaton said.
We have a free online cash flow tool available for small business owners seeking to improve their cash flow management practices.