How to Defend Your Cash Flow in 2022

The last two years have been quite a rollercoaster for UK and global businesses alike, and many have seen their cash flow taken a hit. Some have been bolstered by government financial aid, some were lucky enough to have cash reserves to rely on and sadly, some were unable to make it through the pandemic unscathed. So, looking ahead we’ve taken the time to put together some tips on how to defend your cash flow in 2022.

1. Plan, plan and plan with a cash flow forecast

As a functioning business, we’re sure that you’re already utilising cash flow forecasting (and hopefully other forms of financial planning) for 2022 and beyond. But you’d be surprised at how many businesses don’t take the time to nail down their cash flow forecasts ahead of time. If you’re a seasonal business then the value of a forecast cannot be underestimated. But even for businesses with fairly level expected sales across the year, a cash flow forecast can help account for slower periods throughout the year.

2. Keep a close eye on credit control

Credit control should be a weekly task if you don’t have dedicated staff. And keeping on top of credit control is the only way to keep the pressure on non-paying clients. Keeping open lines of communication with your customers means that invoices are less likely to get missed or left to one side because there is a dispute. Always follow up invoices with further communication and ensure that they’ve been received and no vital information is missing, such as PO number. Maintaining good credit control processes can help to reduce the need for intervention further down the line when invoices are left unpaid.

3. Review your payment process

When was the last time you reviewed your payment terms or terms and conditions of sale? This should be, at least, an annual task. You might find that it is time to tighten up your payment terms and be stricter when enforcing them. Or perhaps you might like to offer incentives for paying early such as a discount. It is also a good idea to review what payment methods you’re offering clients and are they a barrier to getting paid quicker? Also, do you have a provision for charging interest on overdue payments? If not then now is a good time to add this to your terms!

4. Review your invoicing process

Similarly to keeping tabs on your payment processes, have you taken a good look at your invoice template recently? Make sure it is clear and easy to understand and includes everything that a payee might require to make a payment. Many invoices are left overdue because of a dispute and get left on a pile or buried in an inbox until you chase it up. But preempting these issues and using a robust invoicing template will help immeasurably. It’s almost important to invoice on time, the sooner you invoice, the sooner you’ll be paid! But having said that, it is important to time your invoices in a sensible manner, for example, many offices close over the Christmas period so you might want to bring invoicing forward in December. Keep bank holidays in mind too.

 5. Progress unpaid invoices when necessary

Knowing when to stop wasting time and energy on unpaid invoices is important in business. But, it is so important not to give up entirely. So many businesses are afraid of passing on their debts to a commercial debt collection agency for a multitude of reasons. We often hear of people who were too nervous to damage relationships with clients or thought it would be too expensive or a lengthy process. And whilst these things can happen from time to time, a good debt recovery agency will be able to be open and honest with you about their intended plan of action from the outset.

Each of our clients receives a bespoke approach with each of their individual cases and we will be honest from the beginning about our associated costs. In fact, if we are unable to recover your debt then we won’t charge a penny, and if the debt is successfully collected and less than six months old then we charge a maximum of 15% of the debt. We take on negotiations in a tactful and professional manner to ensure that your relationship with your client won’t be affected.

So if you’re planning to keep a tighter ship where your cash flow is concerned, and need some help then reach out to our team today.