Cashflow Guides ACCA

Managing cashow guides
The Managing Cashflow guide series is produced by the Institute of Credit Management (ICM)
in association with ACCA.
ICM
Institute of Credit Management
About ACCA
ACCA (the Association of Chartered Certified
Accountants) is the global body for professional
accountants. We aim to offer business-relevant, firstchoice qualifications to people of application, ability and
ambition around the world who seek a rewarding career
in accountancy, finance and management.
Founded in 1904, ACCA has consistently held unique
core values: opportunity, diversity, innovation, integrity
and accountability. We believe that accountants bring
value to economies in all stages of development. We aim
to develop capacity in the profession and encourage the
adoption of consistent global standards. Our values are
aligned to the needs of employers in all sectors and we
ensure that, through our qualifications, we prepare
accountants for business. We work to open up the
profession to people of all backgrounds and remove
artificial barriers to entry, ensuring that our qualifications
and their delivery meet the diverse needs of trainee
professionals and their employers.
We support our 154,000 members and 432,000 students
in 170 countries, helping them to develop successful
careers in accounting and business, with the skills needed
by employers. We work through a network of over 80
offices and centres and more than 8,400 Approved
Employers worldwide, who provide high standards of
employee learning and development.
FOR FURTHER INFORMATION

Emmanouil Schizas,
Senior Economic Analyst, ACCA
[email protected]
www.accaglobal.com
The Association of Chartered Certified Accountants,

August 2012
Experienced practitioners know

that late payment and poor
cashflow are leading causes of
small business failure even in the
best of times.
During the economic downturn of
2008/9, ACCA teamed up with the
Institute of Credit Management to
promote ten quick and userfriendly guides to optimising
cashflow for small businesses.
The guides can be helpful to small
business clients as a quick
reference and to practitioners as a
trigger for more in-depth
discussions on cashflow and
related services.
THIRD EDITION
MANAGING CASHFLOW GUIDES
1. Knowing your customer

FIVE TOP TIPS
Unless you know exactly who youre trading with,
you wont be able to check if they are good for the
amount of credit you need to grant, you wont be
able to commence legal action effectively if it
becomes necessary.
1.
Can you answer yes to all these

questions?
Do you know the exact name and trading style of
the business? The people or company that own
the business, and are liable for any debts, may
not be the same as the name under which the
business trades. Types of business include,
amongst others, limited companies, partnerships
and sole proprietors.
Check out the exact name and legal status of the

business youre supplying. If its a sole trader or
partnership, the proprietor or partners are personally
liable so make sure you have their full details.
Businesses can disappear much more quickly and
easily than individuals!
For limited companies you can undertake

a free check on a limited companys
basic details using the Companies House
WebCheck service.
2.
Dont be afraid to push for all the information you

need if you cant get it now, it will be far more
difcult later.
If its not a limited company do you know the

name(s) and personal address(es) of the
proprietor or partners?
3.
Watch out for friendly references that the potential

customer gives you. Referees that you choose are far
more effective.
Have you seen headed paper or documentation

that veries this information?
4.
Invest in credit reference information it could save

you a bad debt.
5.
Set some rules that you (and all your employees)

always follow and dont be tempted to break them,
even if youre put under pressure to supply urgently.
Have you used a credit reference agency to check

their details and credit status?
Does the information support the amount of
credit theyll need? There are many sources of
information, the most common and readily
available being credit agency reports and
references.
Have you talked to other suppliers of the business
to obtain references?
Do the details on the order match those you were
given earlier?
If they were previously dealing with your
competitor, are you happy about their reasons for
coming to you?
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For tips on getting paid and advice on best practice in
credit management, tel: 01780 722911
email: [email protected] / www.creditmanagement.org.uk
Business Link
For further information and advice on starting up,
running and growing a business, tel: 01845 600 9006
www.businesslink.gov.uk
ICM
The Managing Cashflow guide series is produced by the Institute of Credit Management (ICM) in association
with ACCA (The Association of Chartered Certified Accountants).
THIRD EDITION
2. Payment terms
FIVE TOP TIPS
If payment fails to arrive for goods or services you
have provided, your cashow can be under real
pressure. Cashow keeps business in business and
if you think you are being paid on one date and
your customer has a different date in mind you
could be in trouble! Making assumptions is
dangerous and formally agreeing payment terms in
advance is vital.
1.
Set out and agree payment terms in advance and in

writing. Its better to know what to expect than to
leave things to chance and wonder why the money
hasnt arrived later.
2.
Watch out for any wording in documents from your

customer that changes the agreed payment terms. If
you accept their order, you might also be accepting
their changed payment terms. If their documents
contain terms that are different to yours and you fail
to challenge them, their terms will take precedence.
3.
Do you negotiate payment terms with your

suppliers that allow you longer to pay than the
terms on which you are paid by your customers?
Whenever you write about payment terms, and on

your invoices, include the words: We will exercise our
statutory right to claim interest (at 8% over the Bank
of England base rate) and compensation for debt
recovery costs under the Late Payment legislation if
we are not paid according to our agreed credit terms.
Even if you dont intend to do so, it can be a useful
deterrent against late payment.
4.
If the answer to the question above is no, do you

have nance or a nance facility in place to bridge
the gap between the time you pay and the time
you get paid?
Raising a further invoice for interest and late payment

charges is an excellent way of gaining your
customers attention and raising the prole of your
outstanding invoices.
5.
If your customer unilaterally tells you they are going

to take longer to pay in future, you will have to decide
how important their orders are to your business. If
theyre claiming the extended payment terms for
invoices already raised, you should demand payment
under the previously agreed terms for goods or
services previously supplied.

questions?
Do you discuss and agree payment terms with
your customers (and with your suppliers) before
you accept (or place) an order?
Do you conrm the agreed payment terms in
writing before you accept (or place) an order?
Do you produce, and then regularly review, a

cashow forecast to ensure that everything is
under control and there is nothing waiting to
surprise you?
Do you have standard payment terms in place and
a policy within your organisation saying that they
cannot be changed unless properly authorised?
Is the payment due date clearly shown on all
invoices?
Do you have a strategy in place for dealing with
requests from customers who suddenly and
unilaterally demand a longer time in which to pay?
Do you include your right to make late payment and
interest charges on your contracts and invoices?
ICM
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THIRD EDITION
3. Invoicing
FIVE TOP TIPS
If you dont raise an invoice, you wont get paid.
Invoicing should not be seen as a back-ofce
administrative nuisance. Rather, it is a vital rststep in achieving healthy cashow.

questions?
1.
The sooner you ask, the sooner you can get paid; send by
rst class post or, better still, by email.
2.
Get invoices right rst time; raising credit notes and

reissuing invoices takes up resources and time better spent
elsewhere. It also changes the payment due date.
3.
Ask customers what they need on the invoice in order to

approve it simply and quickly. Include at least the following:
Your full name and address
Your VAT registration number
Invoice date
Correct customer name
Correct customer address
Delivery address (if different)
Delivery date and method
Customer purchase order number
A clear description of the goods or service supplied
Accurate quantities, prices, discounts and total
amount due
Payment terms and due date
How payment should be made with bank details
(including sort-code and account number from bank
statement)
Invoice number or other reference to be quoted by
payer
Payment terms and due date bank statement and
the reference to be quoted if payment is by direct
credit.
4.
Include the words: We will exercise our statutory right to

claim interest (at 8% over the Bank of England base rate)
and compensation for debt recovery costs under the Late
Payment legislation if we are not paid according to our
agreed credit terms on every invoice, and print your terms
and conditions on the back.
5.
Have a system for resolving disputed invoices promptly,

especially if a customer is using a small query to withhold.
Do you raise an invoice immediately after you

have supplied the goods or service?
Do you make sure that everything the customer
requires appears on the invoice?
Do you have an effective accounting system and
have you considered using dedicated accounting
software?
Do you have a process for investigating and
resolving disputed invoices immediately after the
query is raised?
Do you log the details of disputes so you can x
any avoidable root causes?
Do you keep documentation relating to disputes
as evidence in case the problem escalates?
Do you keep a record of the customers that
dispute invoices so you can spot any who do so
regularly as a way of avoiding prompt payment?
Do you ensure your sales invoices are fully
compliant with HMRC requirement for VAT if you
are VAT registered? See HMRC VAT invoices
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Do you clearly indicate any reference the payer
must quote so you can identify the payment?

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ICM
THIRD EDITION
4. Treating suppliers fairly

FIVE TOP TIPS
Cashow keeps business in business and if you
dont pay your suppliers on time you risk damaging
their business or worse causing, or contributing
to, their failure. You want your invoices paid on
time, and you should do the same. Its not just
good business practice and ethical behaviour; its
also a demonstration of corporate social
responsibility.
1.
Make sure payments due are in your cashow

forecast so they dont catch you by surprise.
2.
Talk to suppliers early if you have a problem

preventing prompt payment.
3.
Paying promptly:
earns your business respect

questions?
may allow you to negotiate better deals or

agree a prompt payment discount
Do you agree payment terms with your suppliers

before you place an order?
helps you avoid late payment or interest charges
Do you pay bills on or before the due date?
ensures supplies dont get stopped
Do you tell your supplier immediately if you have

a query with their invoice so that they can resolve
the problem and still be paid on time?
improves your trading relationships
Do you let your suppliers know immediately if

anything is going to prevent payment by the day
they expect it?
makes you a more valued customer.

4.
Give your key customers a copy of this guide.
5.
Treat your suppliers as you want your customers to

treat you.
Do you make sure your suppliers know what

information and detail you require on their
invoices to enable you to approve and pay them
promptly?
Do you check in advance where and how your
supplier needs to be paid?
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THIRD EDITION
5. Credit insurance
FIVE TOP TIPS
The fact that a business is here today and is
creditworthy does not mean that it will be
tomorrow, next week or next year or in fact that it
will still be in business. If a customer becomes
insolvent and cannot pay money that is due to your
business it can be catastrophic, especially if the
amount involved is large. Insurance companies and
brokers offer credit insurance to meet the specic
needs of clients, industry sectors and specific
transactions to protect against non-payment by
your customers and their insolvency. Good credit
insurers can often provide detailed information on
prospective customers, and can sometimes provide
access to cheaper business nancing.
1.
If your business would be more comfortable trading

with protection against bad debts or, in certain
circumstances, late or non-payment, then credit
insurance is worth considering.
2.
Credit insurance can give you a stronger balance

sheet and (because the risk of bad debts is reduced)
it can make nance through traditional overdraft,
factoring, or invoice discounting more readily
available (possibly at a cheaper rate).
3.
Credit insurers have access to more up-to-date and

detailed information than is readily and publicly
available. This can open up larger credit lines or more
exible payment terms allowing your business to
grow its protable sales.
4.
There are a number of credit insurers and insurance

brokers, who offer a variety of insurance products.
Its always worth shopping around for the most
suitable type of policy and best rates, just as it is for
any other insurance product.
5.
Credit insurers can be a real asset in helping you

introduce good credit management practice into your
business.

questions?
Are you condent that your most important
customers are not at risk of failure?
If the riskiness of a customer rises, do you have
sufcient controls and monitoring in place to
ensure you see it happening?
Can your business take on all the risk itself and
still achieve the level of turnover you want with
each of your customers?
Are you happy with the amount of detailed
information you can gather on your potential
and existing customers?
Can your business afford the risk of expanding
into new and unknown markets?
Can your business achieve sufcient and
protable growth while taking all the risk itself?
Does your business have all the necessary credit
management expertise in-house?
Have you worked out the impact of late or nonpayment by major customers on your business,
and how you would survive it?
ICM
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THIRD EDITION
6. Factoring and nancing options

SIX TOP TIPS
Most businesses extend credit to their customers
and extending credit requires finance. Unless a
business has the cashflow to support the
difference in timing between the cash it collects
and the cash it has to pay out, it can be in trouble.
Managing cashflow effectively means staying on top
of finance and ensuring funds are available when
they are needed.
1.
Dont wait until things become critical. You need time to put
arrangements in place and its easier when youre not
under too much pressure.
2.
Factoring the factor agrees to pay an agreed percentage

of approved debts as soon as they receive a copy of the
invoice; 8085% is common. The balance, less charges, is
paid when the customer pays and the factor will undertake
all credit management and collections activity following an
agreed credit policy. The advance is likely to be with
recourse (meaning that the factor will be able to reclaim its
money from you if your customer does not pay) so the
option of bad debt protection should be strongly considered.
3.
Invoice discounting immediate cash for up to 8085% of the

approved invoice value is available. However, responsibility
for the sales ledger operation and credit management activity
remains with the organisation and the service is normally
undisclosed to its customers. Payments received are paid
into a bank account administered by the invoice discounter,
after which the company is credited with the balance, less
charges. Again, this advance is likely to be with recourse
(meaning that the discounter will be able to reclaim its
money from you if the customer does not pay) so the option
of bad debt protection should be strongly considered.
4.
Supplier finance sometimes called reverse factoring, is an

option if you are a regular supplier to a large organisation
that has an appropriate arrangement in place. Invoices are
paid immediately (and ahead of terms) when the buyer
conrms it has approved the invoice for settlement. The
buyer then repays the nancier according to the original
contract payment terms. This allows you to receive an
immediate cash payment, less a discount that is based on
the buyers credit rating and is without recourse (meaning
that money will not be reclaimed from you if your customer
fails to pay).
5.
Project bank accounts ensure that the contractor and

their supply chain receive promptly monies rightfully due
through certied interim payments. The project bank account
is set up in trust for the whole supply chain and is the medium
through which payments are made. The project bank account
makes payment on receipt of an instruction signed by both
the project client and contractor, and the supply chain is
notied of the day they will receive payment from the project
bank account. Project bank accounts have trust status which
prevents a receiver seizing the proceeds of the account in
the event that the contractor goes into receivership.
6.
Asset based lendingwhere funding is provided, secured

against the property, plant, machinery, stock, or sometimes
even the brand name, of a business.

questions?
Do you have sufcient cash reserves to meet
commitments and pay suppliers on time?
Are you getting longer payment terms from your
suppliers than youre giving to your customers?
Do you have nance facilities in place that will
grow with your business (factoring and invoice
discounting are designed to do just this)
Is the product or service you supply so vital that
you can dictate payment terms?
Is the level of your bank overdraft or short-term
nance sufcient?
Do you monitor the creditworthiness of your
customers?
Do you have access to adequate credit
management systems and skills?
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THIRD EDITION
7. Chasing payment
FIVE TOP TIPS
When you get paid, the sale is complete. When a
customer doesnt pay, theyre hanging on to money
that is rightfully yours and you should ask for it.
You should have a routine system for following up
non-payment that includes letter, email, and
telephone, but be prepared to act more quickly if
the amount is large or you are concerned about the
customer.

questions?
1.
If the invoice is large, call the customer before the

payment due date to make sure it has been received
and there is no query; this is good customer service.
2.
Make immediate contact when payment has not

arrived, be assertive about what you expect and when
you expect it, and make the consequences of nonpayment clear. Follow up promises to make sure
theyre met.
3.
If a customer persistently pays you late or makes

excuses, check them out (see Knowing your customer
guide in this series) and consider whether youre
prepared to continue supplying on credit terms. It
may be better to lose an order, or even the customer,
than supply goods, not get paid and suffer a bad debt
(when that happens you lose the goods and the
money youre due).
4.
Be polite, professional and persistent. Do what you

said youre going to do when you said you were going
to do it.
5.
Try to get customers to pay by electronic transfer or

Direct Debit to avoid waiting for the cheque to arrive.
Did you agree the payment terms with the

customer before you accepted their order?
Are you sure the invoice is accurate and no
dispute has been raised?
Has the payment due date passed?
Has the customer conrmed receipt of the
invoice?
Do you have proof of delivery for any goods
delivered?
Does the invoice say how and where payment
should be made?
Do you keep a record of all collection activity? It
will be vital later if you have to engage a third
party (see When all else fails guide in this series).
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THIRD EDITION
8. When cash runs short

FIVE TOP TIPS
Cash keeps business in business. However healthy
the order book and prot margin, if a business
runs out of cash it wont be able to pay its
suppliers, its wages, or its overheads and it will
fail.
1.
Plan your cashow requirements carefully allowing

for differences in the payment terms you receive
from your suppliers and those you give to your
customers. Regularly update cashow forecasts to
ensure you stay within your nancing facilities

questions?
2.
Monitor stringently against the plan so that you spot

any variance as early as possible.
Do you have sufcient cash or nance availability

to meet commitments as they fall due?
3.
If you think you might have a cashow problem, talk

to your bank or nancier immediately. They might be
able to help and the earlier you speak to them, the
more options there will be.
4.
If you cant pay a supplier on the due date, talk to

them as soon as you know you cannot do so. Again,
the earlier you talk to them, the more exibility theyll
be able to show and the more likely they are to be
able to accommodate an extension to payment
arrangements.
5.
Remember, early communication is key if you avoid

talking to suppliers, your bank and other parties, you
might nd supplies or nance have been withdrawn
or legal action has started and things will quickly
escalate. There were over 70 corporate failures every
working day between May and July 2008, many of
these through lack of cash; you need to make sure
your business doesnt become a statistic.
Are you condent that this will remain the case for
the foreseeable future?
Do you have, and update regularly, a cashow
forecast to ensure you stay within your nancing
facilities?
Are your major customers paying you promptly
and not putting you under pressure to extend
payment terms?
Is your product or service so vital to your
customers that they will pay your invoices rst if
they have to choose who to pay?
Are you sure that none of your customers are
having nancial difculties that might make them
pay you late, or not at all?
Are you implementing good credit management
practice? (see other guides in this series for advice
and tips).
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THIRD EDITION
9. When all else fails

FIVE TOP TIPS
Sometimes, you just cant get paid. Youve done all
the right things and the money has still not arrived.
The longer the debt remains unpaid, the more
likely it is to turn into a bad debt and bad debts
damage your business. Legal action is always an
option but there are others you should also
consider.
1.
Make sure the invoice details are accurate before you

consider taking further action.
2.
Always write and advise your customer that you will

be exercising your statutory right to claim interest (at
8% over the Bank of England base rate) and
compensation for debt recovery costs under the Late
Payment legislation and that you will be taking
further action this might be enough to prompt
them to pay.
3.
If you cant get paid for the outstanding debt, dont

let it grow. Stop supplying any further goods or
services. If your product or service is important to
your customer, it might be just the lever you need to
get payment.
4.
Always consider the commercial reality if the

customer is insolvent or has no available funds,
further action is unlikely to help, and consider the
costs of any action against the size of the debt.
5.
Check out any solicitor or agency before you instruct

them; make sure they belong to their appropriate
trade association or professional body and check that
their background and expertise matches your needs.
Are your invoice(s) raised in exactly the right name? (see

Knowing your customer guide in this series)
Do your invoice(s) have all the information required by
the customer?
Has the customer conrmed receipt of the invoice(s)?
Are you sure there are no queries?
Do you have proof of delivery if the debt relates to goods
supplied, or a signed order for services?
Do you believe the customer has the funds to pay you?
Has the customer promised to pay OR are they refusing
to talk to you at all?
Is the debt straightforward?
Do you have a record of all your collection activity to date?
If the answer to all these questions is yes, its

probably time to move to the next stage and
consider the following.
Taking legal action either yourself or using a solicitor
commencing legal action yourself is relatively easy but
takes time and effort (see HMCS Money Claim Online run
by HM Court Service). Using a solicitor will save you effort
but cost you more if the debt and costs arent recovered.
For debts in Scotland see Small claims in the sheriff court.
Using a debt collection agency to act for you. They will
often work on a no recovery no fee basis, collecting debts
is their specialist area, and most will escalate action
through their own legal partners if it becomes necessary.
You should be aware that the percentage commission can
be substantial if they succeed, especially if the debt is large
(see CSA Members to nd agencies who belong to the
Credit Services Association and follow its code of practice).
Issuing a statutory demand that you can follow up 21
days later with a bankruptcy (individual) or winding up
(company) petition, as long as the debt is at least 750,
(see Insolvency Service Statutory Demand to download a
Statutory Demand (Form 4.1). You need to bear in mind
that, if the customer fails to pay, their insolvency may
follow and you are then even less likely to recover the debt.
(see When your customer goes bust guide in this series).
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THIRD EDITION
10. When your customer goes bust

Inevitably, businesses fail and when one of your
customers goes bust it hurts. There is little you
can do except wait to hear the outcome. The general
outcome is that the debtors assets are divided
among its creditors and the insolvent debtor is
released from the burden of its debts. Once most
formal insolvency processes are underway, you
cannot start or continue any action to recover your
debt.
Types of insolvency
It helps to understand the main types of insolvency (for
more detailed information see www.insolvency.gov.uk).
Bankruptcy can only apply to individuals (including
sole traders and individual members of a
partnership). Bankruptcy petitions may be presented
to the court by the individual, by creditors who are
owed 750 or more, or by the supervisor of an
individual voluntary arrangement. A bankruptcy
order is made by the court.
Individual Voluntary Arrangement (IVA)
An individual comes to an arrangement with creditors
to pay his/her debts in full or in part over time as an
alternative to bankruptcy. The arrangement is set up
by a licensed Insolvency Practitioner who will put it
to a meeting of creditors. If the proposal is accepted
at the meeting, the agreement reached with the
creditors will be legally binding. An Interim Order is
sometimes issued by a court and will immediately
protect the debtor from any legal action by creditors.
Company Voluntary Arrangement
A company comes to an arrangement with its creditors
to pay the debts in full or in part over time. A CVA
begins with the company (or its adviser) drafting a
formal proposal at a Creditors Meeting to pay part
or all of the debts. If the proposal is accepted by the
creditors, the arrangement will become legally binding
and the directors will retain control of the company.
ICM
Compulsory Liquidation
Compulsory liquidation is the winding up of a company
or a partnership by a court order (a winding up order).
A petition is normally presented to the court by a
creditor stating that he or she is owed a sum of
money by the company and that the company
cannot pay. The Ofcial Receiver becomes liquidator
when the order is made but an Insolvency Practitioner
will be appointed to take over if the company has
signicant assets. The liquidators role is to realise
the companys assets, pay all the fees and charges
arising from the liquidation, and pay the creditors as
far as funds allow in a strict order of priority.
Creditors Voluntary Liquidation
In a creditors voluntary liquidation the shareholders
pass a resolution to wind the company up without
the need for a court order. A Creditors Meeting is
held to nominate the appointment of a liquidator and
consider a statement of affairs. Creditors can appoint
a committee to work with the liquidator, whose role is
to realise the companys assets, pay all the fees and
charges arising from the liquidation, and pay the
creditors as far as funds allow in a strict order of priority.
Administration
Administration applies to limited companies and
partnerships and is intended to get the company out
of trouble and trading again if possible. Administrators
can be appointed to a company that is unable, or is
likely to become unable, to pay its debts. They can
be appointed by the courts (on application from a
creditor, directors or partners), the holder of a
qualifying oating charge over the assets of the
business, or the company or its directors. An
administrators primary goal is to rescue the company
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as a going
concern. If this isnt possible, the administrator
will try to get a better result for the creditors than
Institute
Credit Management
would beofpossible
if the company was wound up. If
For
tips on
getting
and advice
on best practice
in
neither
of these
is paid
possible,
the administrator
will sell
credit
management,
tel: 01780
722911
the companys
property
to make
at least a partial
email:
[email protected]
/ www.creditmanagement.org.uk
payment
to one or more
secured or preferential
creditors, such as employees or the bank.
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THIRD EDITION

10. When your customer goes bust (continued)
FIVE TOP TIPS

1.
You should be contacted automatically by the ofcial

receiver or insolvency practitioner if they know that
you are a creditor.
THE GUIDES IN THIS SERIES

1. Knowing your customer
2. Payment terms
2.
3.
4.
5.
If you believe an individual may be subject to

insolvency proceedings and you have not heard,
search the Individual Insolvency Register.
3. Invoicing
4. Treating suppliers fairly
If you believe a company may be subject to

insolvency proceedings and you have not heard, use
the Companies House WebCheck service.
5. Credit insurance
If you think your customer is bankrupt or the subject

of a compulsory liquidation, contact the insolvency
enquiry line 0845 602 9848 or email insolvency.
[email protected]
7. Chasing payment
If in doubt, contact the official receiver or insolvency

practitioner to make sure they have details of your
debt. Also, contact them if you have any information
about the assets or the conduct of an individual or
company.
10. When your customer goes bust
6. Factoring and nancing options
8. When cash runs short

9. When all else fails
All these guides are available from

the ACCA website.
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Cashflow Guides ACCA

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Cashflow Guides ACCA

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What is the purpose of the Managing Cashflow guide series?

What is the purpose of the Managing Cashflow guide series?

What organizations are involved in producing the Managing Cashflow guides?

What organizations are involved in producing the Managing Cashflow guides?

Managing cashow guides

FOR FURTHER INFORMATION

The Association of Chartered Certified Accountants,

Experienced practitioners know

MANAGING CASHFLOW GUIDES

1. Knowing your customer

Can you answer yes to all these

Check out the exact name and legal status of the

For limited companies you can undertake

Dont be afraid to push for all the information you

 If its not a limited company do you know the

Watch out for friendly references that the potential

 Have you seen headed paper or documentation

Invest in credit reference information it could save

Set some rules that you (and all your employees)

 Have you used a credit reference agency to check

MANAGING CASHFLOW GUIDES

Set out and agree payment terms in advance and in

Watch out for any wording in documents from your

 Do you negotiate payment terms with your

Whenever you write about payment terms, and on

 If the answer to the question above is no, do you

Raising a further invoice for interest and late payment

If your customer unilaterally tells you they are going

Can you answer yes to all these

 Do you produce, and then regularly review, a

MANAGING CASHFLOW GUIDES

Can you answer yes to all these

Get invoices right rst time; raising credit notes and

Ask customers what they need on the invoice in order to

Include the words: We will exercise our statutory right to

Have a system for resolving disputed invoices promptly,

 Do you raise an invoice immediately after you

Institute of Credit Management

MANAGING CASHFLOW GUIDES

4. Treating suppliers fairly

Make sure payments due are in your cashow

Talk to suppliers early if you have a problem

Can you answer yes to all these

may allow you to negotiate better deals or

 Do you agree payment terms with your suppliers

helps you avoid late payment or interest charges

 Do you pay bills on or before the due date?

ensures supplies dont get stopped

 Do you tell your supplier immediately if you have

improves your trading relationships

 Do you let your suppliers know immediately if

makes you a more valued customer.

Give your key customers a copy of this guide.

Treat your suppliers as you want your customers to

 Do you make sure your suppliers know what

MANAGING CASHFLOW GUIDES

If your business would be more comfortable trading

Credit insurance can give you a stronger balance

Credit insurers have access to more up-to-date and

There are a number of credit insurers and insurance

If its not a limited company do you know the

Have you seen headed paper or documentation

Have you used a credit reference agency to check

Do you negotiate payment terms with your

If the answer to the question above is no, do you

Do you produce, and then regularly review, a

Do you raise an invoice immediately after you

Do you agree payment terms with your suppliers

Do you pay bills on or before the due date?

Do you tell your supplier immediately if you have

Do you let your suppliers know immediately if

Do you make sure your suppliers know what

Did you agree the payment terms with the

Do you have sufcient cash or nance availability

Are your invoice(s) raised in exactly the right name? (see