Cash is King

Cash flow is of vital importance to the health of any business. “Turnover is vanity, cash flow is sanity, but cash is king”.  Whilst it may look good to have record sales in the pipeline, without cash coming into the business, it is unlikely to survive to deliver those sales. A business can often continue to trade in the short to medium term even if it is making a loss, for example by delaying payments to creditors (although that can affect relationships with those creditors). However, no business can survive long without enough cash to meet its immediate needs.

Below are ten ways in which you can manage your cash flow and ensure that “cash is king” in your organisation.

Invoice Promptly

If you do not invoice your customers, the clock does not start ticking and therefore you cannot chase them for payment. Invoice on delivery or as agreed with an individual customer.  Do not delay however busy you are.

Make Sure the Invoice Details are Correct

Get the invoice details correct first time, as this will prevent having to correct the invoice, which will result in a delay in payment. For example, is the customer a limited company or a sole trader, are you invoicing the right person, and is the pricing correct?

Understand what you need to do to get paid

Make sure you know how to be paid, for example where the invoice is to be sent, whether you have to supply the purchase order number, and whether the supply requires sign-off before you can raise your invoice. Getting it wrong will mean further delay in payment.

Know your Customer

Before supplying any goods or services carry out some basic research on your customers such as a credit reference or some basic online checks, so you can be sure they will be able to pay.

Agree Payment Terms in Advance

Agree payment terms in advance with the customer, in particular if payment is to be made by instalments. Confirm the terms in writing.  Question why a customer requests a long payment plan and assess whether, if you were to agree to the terms, this delay could be passed on to your suppliers to assist with your cash flow.

Not all Business is Good Business

Always consider if a customer is worth taking on. If a customer starts trying to cut your price from the start, do you actually want their business?  Customers who want a bargain price are normally bad payers.  Calculate if you are going to make a profit after allowing for all costs including providing credit, as you may have to fund your business while waiting for payment.

Negotiate Terms

If a client wants longer than normal payment terms, ask for something in return i.e. a higher price/fee. They have chosen your product and service, so it is only fair that there is some “quid pro quo” for allowing delayed payment.

Never to be Afraid to Ask

You have delivered the work or service, so do not be afraid to ask for payment. In chasing, you may discover an issue which is preventing payment and be able to resolve it quickly to avoid further delay.

Late Payment Interest

Consider late payment interest as part of your terms & conditions to encourage early payment. Make sure that the interest rate and when it will apply are set out in writing.


Make it clear what you will do if payment is not made and do not make empty promises. Use third parties such as collection agents or a solicitor to collect payment.  An initial nudge from a third party may speed up payment or highlight that your customer has financial problems, in which case steps can be taken to protect your position, such as a payment plan or a charge registered against the business.

Cash flow is always important, but especially in these days when it is not easy to obtain credit as banks are reluctant to lend money. Despite falling interest rates, getting a loan is more difficult, therefore, concentrate on your cash and do not accidentally become a lender to your customers!