Google Adwords 0808 278 1398 Bing Ads 0808 274 4482

The amount of cash we have tied up in credit sales is causing cash flow problems — what should we do?

You may be able to encourage customers to pay you more quickly. For example, you could offer a discount for cash payment.

You should also consider whether you can free up any of the other money you have tied up in working capital. For example, you might sell off old stock, control your purchases more closely or ask your own suppliers for extended credit terms.

You may also want to look at financing options, such as factoring or invoice discounting. This allows you to receive most of the value of outstanding invoices without waiting for customers to pay. Factoring may well be an option if your annual credit sales are at least £50,000—£100,000 and are not concentrated with a handful of customers.

If you cannot reduce your cash flow problems in any of these ways, you may have to consider restricting credit sales: even if that means slowing the growth of your business and reducing profits. Overtrading beyond the turnover your cash flow can support is a common cause of business insolvency.

Related FAQs

Expert legal advice you can rely on,
get in touch today

Please let us know you are not a robot

Your local legal experts

Why QualitySolicitors?

With QualitySolicitors your first initial assessment is free, so you can call us without worrying about being charged for a call you might not have actually needed to make. And because we place our clients are at the heart of everything we do, we make these five customer service promises to make sure you'll feel properly looked after.

This is why, in the first instance, most people looking for legal help in relation to a 'Home And Property' call QualitySolicitors for a Free Initial Assessment over the phone before requesting our Ask the Legal Expert service; which is an introductory 45-minute face-to-face consultation for £99.