Our training courses will be valuable to many businesses. We thought it would be useful however, to give some cash flow tips for particular types of businesses. These are our tips for cash flow, for tradesmen who deal with consumers.
Top Three Cash Flow Tips For Trades
Our free guide contains lost of tips but these are the ones we think trades should concentrate on.
1. Payment Terms
Most trades will charge for a combination of labour and materials. It is important you strike a balance with the customer as to what payment terms are in place. Leave it so that payment falls due after the work has been completed and you run the risk of not getting paid. Ask for payment upfront and customers might look elsewhere as they run the risk the work will not got done or will be unsatisfactory. A balance needs to be struck. Perhaps use staged payments.
Construction contracts might need you to consider the specific legislation that applies, including The Scheme for Construction Contracts (England and Wales) Regulations 1998.
2. Do Your Homework On Your Customers
If you are carrying out work for an individual, check the insolvency register to see whether he has any insolvency issues.
The insolvency register lists any bankruptcy orders or individual voluntary arrangements. If the potential customer is on this list, tread very carefully about giving credit as they are unlikely to have the money to pay. It is difficult to pursue a bankrupt through the courts.
If your customer is a business or company, also search Companies House and the London Gazette to see if there are any worrying notices.
3. Plan Ahead For Tax
Make sure you plan ahead for tax payments.
Trying to find the money when VAT payments or tax on profits falls due, can be cause an instant cash flow problem if you haven't set money aside to pay. Don't get caught out as HMRC can be very aggressive in pursuing money due.