2 Ways To Get The Best Out Your Creditors

The most successful businesses are those which manage their cash flow properly

. Just because a business is profitable does not mean it has sufficient cash to pay its way all the time. There will be times in any businesses sales cycle, where income drops off, usually because of seasonal variations or from periodic events like natural disasters, drops in consumer confidence or even situations which are more extreme as has been seen during the global financial crisis. MYOB is a sophisticated accounting software package that gives you the tools to work out cash flow projections well in advance. By attending MYOB courses you'll be in an even better position.

Even in good times however, good business operators know to put cash aside during these periods to offset the lower returns that can occur at other times of the year. Evening out cash flow is a vital process that every business needs to plan for.

There are several strategies you can implement to do this, like the one explained above. But in addition to this you can also control your debtors and your creditors and maximise your cash flow position even more.

Debtors need to be regularly monitored to ensure that they pay their bills on time. Any credit facilities which you have established should be examined every month and it should be standard practice to cease credit facilities until accounts are brought into order. Where your debtors continually abuse the terms of your credit arrangement, you should give consideration to cancelling it and place them on a cash only basis. if you have attended some MYOB courses you will probably understand this already.

There is no point maintaining a customer who promises to pay but then avoids responsibility at the end of the payment cycle.

Another way to manage cash flow is to negotiate the best deal you can with your creditors. Whilst this may not always be an easy thing to do, making sure you have the best credit terms can be an important part of your overall business management strategy.

Here are a few things you can do.

Manage your cash flow. Use your accounting software to provide you with accurate data about your cash flow. Knowing your financial position allows you to make promises to your creditors that you know you can keep. For instance after you have established a good track record for paying your accounts on time, it is easy to negotiate longer payment periods. It is a good practice to always pay your bills as soon as you can and only use the extended credit terms when you absolutely have to.

Use a positive relationship with a creditor to negotiate better pricing. You may be able to negotiate lower prices for the goods you wish to purchase if you have a good track record of paying your bills on time. In fact, your creditors will be more likely to give you preferential pricing when they know you are true to your word.

If you have MYOB, it is easy to arm yourself with information about your payment history with creditors and point out how they have benefited from your account. You will be even better off if you attend some MYOB training courses but make sure you use the software to its fullest capacity.

by: Sophie de Somerville

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