Offering Customer Credit

If you are prepared to offer credit terms to attract customers then you must make sure the debt is collected.  This will take time and effort so there are some important things to consider.

Some Cash Flow Management Tips

1.     Spread the cost of assets over a few years or their useful lives.

Series - What Can Squeeze Cash Flow?

Paying for Assets out of Cash – Another quite common mistake.  Assets generate income usually over a period of years and yet some businesses choose to purchase them out of their cash reserves.  

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Supplier Price Rises – It is very possible that you are in a highly competitive market and that you are unable to pass on immediately the full extent of your Suppliers price increases.

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No Supplier Credit – We have come across quite a few Entrepreneurs new to business who seem to think that it is in some way bad business to take credit offered to them or to even ask for credit terms.
 

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Credit for Your Customers – You may have started introducing credit terms to your best customers.  

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Too Much or Slow Moving Stock – Retailers may have over-brought on stock that isn’t selling fast.  

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Staffing Levels – So you get to the point in your business’ life where you are at maximum capacity with the current level of staff you have and you want an extra employee to grow your business. 

In the coming weeks we will highlight some examples of what can squeeze cash flow.  This week we will look at:

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Rapid Growth – Your business is ticking along nicely when you are offered a lucrative contract to supply your product for which payment will not be received for 90 days after you’ve done the work, brought the supplies and paid the labour, and continue paying your ongoing expenses.