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How to manage cash flow
1. Ask yourself
The folly of a bad debt can usually be traced back to an earlier decision (or lack of one) made by you. Did you seek appropriate answers to the right questions in the first place?…
- Was the debtor credit-worthy?
- What credit checks did I run?
- Did I use a credit or trade application form?
- Did I ask for directors’ guarantees or a bank guarantee?
- Can I charge interest on overdue amounts?
- Am I able to recover any fees associated with collection of a delinquent debt?
Here’s what you should ask yourself if you gave too much credit:
- Did I impose a credit limit?
- Did I monitor my debtor’s performance and take heed of the signs of insolvency?
- Did I make the mistake of over-exposing myself to one debtor, thus increasing my loss when the debtor failed?
2. Don't forget
Knee breaking and other acts of bodily violence are no longer acceptable methods of maintaining a cash flow.
3. Quotable quote
Getting your money from some people can be like extracting blood from a stone. Some act as if they've never received your account; others say they've misplaced it, or that it's just slipped their mind. Whatever the reason, you get no money to keep the wolves from the door… When it all boils down, the key to running any business success-fully is cash-flow. …
