Bill French is a Licensed Business Coach with ActionCOACH, the World's Leading Business Coaching Team (as voted by Entrepreneur Magazine), based in Garscadden House, Drumchapel. If you would like more information on his services he can be contacted on 0141 274 2020 or billfrench@actioncoach.com.

You can also visit his website at www.actioncoach.com/billfrench

Cash flow - the life blood of your business

You may have heard the saying 'turnover is vanity, profit is sanity but cashflow is king'.

This has never been more true than in the current economic climate.

Without keeping control of your cash flow, your business could be bleeding to death.

From my many discussions with business owners, I often find that the total amount they are owed by their outstanding creditors equates to the size of their bank overdraft.

In other words they are paying the bank to borrow money so that their customers can have free credit.

Remember, you provided your goods and services in good faith and it is entirely right and reasonable that they pay you on time in accordance with the terms agreed on. It is your money.

Here are 10 ways you can stop this happening now:

1. Implement early payment incentives (e.g. two per cent for payment within 10 days, net 30 days).

2. Have a minimum sale value for orders before granting credit.

3. Set a credit limit for every customer and carry out a credit check before giving them credit facilities.

4. Have your customers pay by credit card or get authority to debit their bank account.That way you can process payments immediately and you do not have to wait for customers to send the cheque.

5. Stop extending credit to slow payers - refer them to their bank.

6. Do not wait until the payment is overdue before contacting them to find out how they will be paying. Get in ahead of the queue and ask for payment before everyone else. If your terms are 30 days contact them after 20. Do not accept any excuses - you have upheld your end of the bargain. Keep on contacting them by letter or phone until they pay - that way if they are having challenges they are more likely to pay you first.

7. Update your credit control and debtors processes and use them. Review your debtors reports at least once a month, calculate your average debtor days and implement strategies to reduce it.

8. For regular payments set up standing orders or, better still, direct debits.

9. Educate your customers to be prompt payers - if they are late on paying in accordance with agreed terms and conditions then initiate recovery procedures.

10. Email invoices and statements, as opposed to mailing, to get faster responses.

Think, how much more money would you make if you did not pay overdraft charges?

How would that make you feel?

Clydebank Post - 27 January 2010