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Chapter Four | The 8 Integrities of Business
Sales and Accounts Receivable
• Invoice your customers quickly upon shipment of goods or when services
are provided.
• Require payment up front until credit has been established. Require that
credit applications be completed before granting credit, and always check
references. Standard credit forms are available at office-supply stores.
• Establish a minimum dollar amount for orders before granting credit.
• Establish late-payment penalties as part of your terms and conditions—
and enforce them.
• As your business grows, to speed up the receipt of cash, you may want
to have your customers pay their bills online with direct deposit.
Expenses and Accounts Payable
• Many businesses forget that a crucial part of cash flow is managing their
own bill paying. Make sure you pay your bills promptly. Ask for extended
payment terms up front. After you have paid timely for two to three
months, ask for additional extensions on your payable terms. A supplier
will usually extend credit for 30 to 90 days to a good customer.
• Keep your overhead to a minimum. Before purchasing something new,
set a goal for increasing sales to justify the expense. Preserve your
investors’ funds for costs directly related to business operations, not
overhead, if at all possible. As your sales increase, you can purchase the
overhead-related items from the cash flow—but only if you have set and
achieved new higher sales goals.
General Cash Management
• Have an investment plan for your cash on hand to maximize its
earning potential.
• Establish a line of credit with your bank before you need it.
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