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Ice cream parlour: Cash from debtors


'Cash from debtors' means any income you receive from account customers that you send an invoice to, usually at the end of the month. 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.

If you manufacture the ice cream yourself you might sell some to trade customers, such as other caterers and retailers. You may decide to offer account terms to regular trade customers.

If you only sell ice cream to customers in your parlour or cafe then you probably won't have any Cash from debtors. All your customers will pay you for their ice cream there and then.

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. Account sales are likely to make up a relatively small percentage of your total income. 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 you'll charge interest 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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