When I meet a business coaching client who has cash flow problems, it does not seem to matter if they are running a large or small businesses, I show them five daily business habits that make a big difference to the health of their bank account:

Simple habits for a healthy cash flow

1. Train your sales people to ask (before selling) how the customer will pay.

o If they agree a discount, make sure that is subtracted from their commission. Otherwise they are not selling your goods but giving them away!
o If they get a cash payment, add to their commission the 4% payment that would otherwise have gone to the credit card company.

2. Deliver your invoice with the goods and ask for immediate payment before you leave.

o That will encourage your customer to check the goods are accepted while you wait.
o You will avoid duplication of lost paperwork because you will give the invoice to the person who can pay it and
o The cash payment will go straight into your bank as soon as you get back to the office.

3. If you must offer credit:

a. Check who will authorise payment for the goods (and often this is not the buyer).
b. Check (with the accountant or book keeper) the time in the month for hassle-free payment.
c. Ensure that the interest you charge matches the credit term agreed by your customer.

4. Manage slow payers by chasing them using phone, letter or email at appropriate intervals:

a. Use a friendly reminder to check that the invoice reached the right person and they have no good reason for withholding payment.
b. Send a firmer demand for rightful payment against the goods delivered - do this in person to build the customer relationship.
c. Issue a warning of sanctions and legal action - possibly through your legal team.

5. Finally you need to demand the outstanding monies in a formal letter (copied to the buyer, authoriser and book keeper). Ultimately you must be prepared to issue a writ or small claims court summons.

Review your cash flow management
I find that knowing my customers and chasing the cash I have earned means that I rarely go beyond steps 1 and 2.

Where my clients find their customers are regularly reach step 4, I get them to review that account, the service they are offering and the profits they are achieving. If the profit made on that customer is not worth the hassle of chasing their payments, I suggest that my client encourages them to place their next orders with a competitor so my client can focus on customers that appreciate the value of good service.

Ultimately, maintaining a good cash flow is an attitude of mind - you have earned the money and you expect it to accumulate in your bank account.