Tips For Good Financial Control

• Make sure that you raise invoices promptly and clearly state your terms of payment. Typical terms would be payment within 30 days.
• Chase your debtors for payment once they exceed their terms.
• If a customer has not paid an outstanding bill you should not be afraid to refuse him further credit.
• You should review your prices on an annual basis and increase them at least in line with inflation.
• Be smart when you are buying in raw materials. Bulk buying may be cheaper but stockpiling materials is rarely a good idea. Try to get the best price for the amount you need.
• Pay your suppliers within the terms they set, to keep a good relationship with them.
• Remember to keep enough money back to pay any VAT or tax due.
• Review your cashflow forecasts and budgets regularly and compare them with your actual income and expenditure. Remember to adjust your forecasts for changing circumstances.
• If you foresee problems, whether in cashflow, supply of materials or sales fluctuations take the appropriate action as soon as possible.
• Be smart in making payments such as rates, electricity, and telephone bills. These and others can be paid by monthly direct debit. This has the advantage of spreading the payment evenly over the year, and cutting down on the amount of time needed for administration in the business.
• It is wise to draw up a set of trading terms and conditions. These can be sent out to potential customers with quotations.