How can cash flow be improved?

By April 20, 2020 No Comments
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How can cash flow be improved?

Restaurant controlling credit

In business, it’s sometimes tempting to concentrate on closing a deal before making provisions for proper payment procedures.  But the implementation of a credit policy is essential for any business. 

Some effective procedures to maintain a firm credit policy include:

  • allowing only cash, credit card payment or a seven-day credit limit
  • endorsing the credit terms without exception and ensuring that the trading terms are clear and well documented.  Display these terms simply and boldly on invoices and account statements.
  • establishing documentation procedures for the recording of credit sales, their payments and when payments come in.
  • subscribing to a Credit Reporting Service to check the validity of customers.
  • enforcing the terms of the credit policy when they become overdue.  If customers get away with a delayed payment once, they will be encouraged to try again.  Do not overlook small accounts.  
  • establishing a strategy to deal with overdue accounts.  Perhaps send an email one week, telephone the next and visit them in person the next.  Continual pressure will help to ensure that the account is given preference.
  • analysing the overall business trends in relation to credit, especially targets, the proportion of disputed accounts, and the length of outstanding accounts will provide a simple overview of operations and allow identification of better business practices.

How can cash flow be improved?

You are in business to make a profit and keeping correct financial records will enable you to measure, control, evaluate and forecast your profitability, your financial needs and your financial viability.

Want to know more? For a very low investment why not purchase a copy of:

How to Cook the Books’ eGuide

and find out why cash flow is important to your restaurant business.

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