Sales Today, Cash Tomorrow? Not Always.

 

Many business owners are driven by the desire to meet ambitious sales targets. In pursuit of those goals, it's common to consider offering extended payment terms to secure new business. While this can help close deals, it also carries significant financial risks, particularly to your cash flow. 

 

 

For example, if you give a customer 60 days to pay after delivery, you're effectively providing them with an interest-free loan. Your money stays in their bank account, not yours, for two months. During that time, your business may be limited in its ability to invest, pay suppliers, or cover operational costs. 

 

 

The pressure increases when you’ve incurred costs upfront, such as materials, labour, or other overheads. These expenses often need to be settled before your customer even begins to process your invoice. This mismatch can leave you financially stretched and out of pocket. 

 

 

There’s a reason the saying "cash is king" remains so relevant. Sales alone don’t keep a business running—cash does. Outstanding invoices may appear to offer a future cushion, but until the money is in your account, they can’t be used to meet your financial obligations. 

 

You can’t pay staff, invest in equipment, or expand your operations using unpaid debts. The ability to turn sales into cash quickly is essential to long-term success. 

 

 

Offering generous credit terms can lead to a dangerous position known as overtrading. This occurs when a business grows faster than its available cash allows. If you're paying your suppliers on 30-day terms but waiting 60+ days for customer payments, you’ll soon run into a funding shortfall, even if sales look strong on paper. 

 

 

This is where JSB Accountants can support you. 

 

We help business owners assess their credit policies, improve cash flow management, and ensure their growth is financially sustainable. From forecasting and credit control to cash flow improvement strategies, we provide tailored advice based on your specific business needs. 

 

Whether you’re a start-up or an established company, we can help you put systems in place that protect your business from unnecessary financial strain. 

 

Take Control of Your Cash Flow 

 

Before offering extended credit to win your next sale, take a moment to consider the impact, and get expert advice. 

 

JSB Accountants is here to guide you. A short consultation could save your business from long term cash flow challenges and help you grow with confidence. 

 

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