Industry sector:

Car alarm fitter: Cash from debtors


'Cash from debtors' means income you receive from account customers that you send an invoice to, usually at the end of the month. After you've sent them an invoice but before they pay, they are your debtors. When they pay you, the payment is referred to as Cash from debtors.

Decide whether you will offer account facilities, and if so who will be eligible. Your account customers might be local businesses or organisations for whom you work on a regular basis such as vehicle hire businesses, taxi firms, driving schools, courier firms, the local council (if they operate their own fleet of vehicles) and so on.

Payment terms

Agree payment terms with your account customers so that there is no confusion as to when invoices should be settled. You might, for example, require all accounts to be settled every month, perhaps by a particular day of the month. Alternatively, you might state on your invoice that payment must be made within, say, 28 days of the invoice date.

Make an estimate of the amount of income you are likely to receive from account customers each month, including VAT. Enter the amount in your cash flow in the month in which the money is due to be received.

Consider what steps you will take to recover any overdue amounts and whether interest will be charged on these.

Your business stationery

Have some invoices printed for your account customers. A good printer will be able to advise you on layout, style and even content. If you are registered for VAT you must include your VAT registration number on your invoices.

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