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Managing cash flow

Cash flow management is an integral part of your day-to-day business operations.

Below is a list of tips that will show you how to manage finances in your business and prepare you for any cash shortages.

1. Know your customer

  • Check out the exact name and legal status of the business you are supplying. If it’s 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 perform a free check on a limited company’s basic details using the Companies House WebCheck service.
  • Invest in credit reference information – it could save you bad debt in future.

2. Payment terms

  • Set out and agree on payment terms in advance and in writing. It’s better to know what to expect than to leave things to chance and wonder why the money hasn't arrived later.
  • Whenever you write about payment terms or write 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 don’t intend to do so, it can be a useful deterrent against late payment.
  • Raising a further invoice for interest and late payment charges is an excellent way of gaining your customer’s attention and raising the profile of your outstanding invoices.

3. Invoicing

  • The sooner you ask, the sooner you can get paid; send invoices by first-class post or, better still, by email.
  • Ask customers what they need on the invoice in order to approve it simply and quickly. Include at least the following:
  1. Your full name and address
  2. VAT registration number
  3. Invoice date
  4. Correct customer name and address
  5. Delivery address (if different)
  6. Delivery date and method
  7. Customer purchase order number
  8. A clear description of the goods or service supplied
  9. Accurate quantities, prices, discounts and total amount due
  10. Payment terms and due date
  11. How payment should be made with bank details (including sort code and account number from bank statement)
  12. Invoice number or other reference to be quoted by payer
  13. Payment terms and due date bank statement and the reference to be quoted if payment is by direct credit

4. Chasing payment

  • Make immediate contact if payment has not arrived. Be assertive about what you expect and when you expect it and make the consequences of non-payment clear. Follow up promises to make sure they are met.
  • Be polite, professional and persistent; do what you say you are going to do when you said you were going to do it.
  • Try to get customers to pay by electronic transfer or direct debit to avoid waiting for the cheque to arrive.

5. When cash runs short

  • Plan your cash flow requirements carefully, allowing for differences in the payment terms you receive from your suppliers and those you give to your customers. Regularly update cash flow forecasts to ensure you stay within your financing facilities.
  • Remember, early communication is key – if you avoid talking to suppliers, your bank and other parties, you might find supplies or finance withdrawn or legal action commencing if cash runs short; things will escalate quickly.

6. When all else fails

  • If you can’t get paid for the outstanding debt, don’t 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.
  • Always consider the commercial reality – if the customer is insolvent or has no available funds, further action is unlikely to help. Consider the costs of any action against the size of the debt.
  • Consider taking legal action either yourself or using a solicitor to do so – commencing legal action yourself is relatively easy but takes time and effort. You can take action through the courts or consider issuing a statutory demand that you can follow up 21 days later with a bankruptcy order.

South Africa

Cape Town

Regent Square
Doncaster Road
Kenilworth 7708 +27 (0) 21 657 2120


25 Richefond Circle
Umhlanga 4320 +27 (0) 31 536 8843

United Kingdom


Castlewood House
77/91 New Oxford Street
WC1A 1DG +44 (0) 20 7759 7514


5-7 Selsdon Road
South Croydon
CR2 6PU +44 (0) 20 7759 7581



9 Yarra Street
South Yarra
VIC 3141 +613 (0) 8651 4500

Sable International is a trading name of 1st Contact Money Limited (company number 07070528), registered in England and Wales. We are authorised and regulated by the Financial Conduct Authority in the UK (FCA no. 517570), the Financial Services Conduct Authority in South Africa (1st Contact Money [PTY] Ltd - FSP no. 41900) and hold an Australian Financial Services License issued by ASIC to deal in foreign exchange (1st Contact Group - AFS License number 335 126).

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