Industry sector: Business services

Office based: Cash from debtors

It's quite common for office-based businesses to invoice their clients - not many operate as cash businesses and many provide services for other businesses rather than just for private individuals. It is likely that you will invoice your clients either at regular intervals, because you are dealing with their affairs on a long-term basis, or once you have finished the particular work for which they engaged your services.

After they 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 will have agreed with your clients your payment terms and these should be prominently stated on your invoices.

You should make an estimate of the income you might receive from invoiced clients and enter that amount in the month when the money will be received.

Your business stationery

Ask your local printer to produce some invoices for you. They will be able to advise you on layout and style. You must have your VAT registration number on your invoice if you are registered for VAT.

Early settlement discounts

To bring outstanding amounts in more quickly you might decide to offer clients a small discount for early payment.

Think about the steps you will take to recover any overdue amounts and whether you will charge interest on these.

To maximise cash flow, some firms use the services of a factor or discounter.