Industry sector:

Poultry farm: Cash from debtors

You are likely to have account customers who you invoice at regular intervals. These may be businesses such as packers, processors, wholesalers, supermarkets, local retailers and catering establishments. After account customers have been sent an invoice, but before they pay, they are your debtors. When they pay you, the payment is referred to as 'Cash from debtors'.

Payment terms

You need to agree your payment terms with your account customers in advance so that there's no confusion about when payments are due. Ideally, you would want to be paid immediately but many of your trade customers will expect a certain amount of credit.

The credit period you offer is likely to vary depending on the type of business you're supplying, for example:

  • packers - 14 days
  • supermarkets - 28-56 days
  • processors - 30 days
  • local retailers - 7-30 days

If you're a pullet rearer, you're likely to offer egg producers payment terms of between 14 and 28 days (possibly with a proportion of the payment required in advance).

Early settlement discounts

If you have a lot of account customers you might decide to offer them a small discount for early payment. This can help to bring the money in more quickly.

Consider what steps you will take to recover any overdue amounts and whether you will charge interest on these. Don't go on supplying customers who do not pay their bills.

You should make an estimate of the income you might receive from account customers and enter that amount in the month in which the money will be received.

Your business stationery

You should ask your local printers to produce some invoices for you for your trade customers. They will be able to advise you on layout and style. You must have your VAT registration number on your invoices if you are registered for VAT.