Industry sector: Retail and wholesale

Milk round: Cash from debtors

'Cash from debtors' means any income you receive from account customers.

Account customers are usually invoiced at the end of the month, and 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.

You may have some trade or wholesale customers (semi-retail) to whom you decide to offer account facilities. You will give them a trade discount from the normal price - this discount might be between 10% and 20%.

Payment terms

Agree payment terms with your account customers so that there's no confusion over 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 each invoice date.

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.

Early settlement discounts

To bring in the money more quickly you might decide to offer your account customers a small discount of, say, 2.5% if they pay within a week of the invoice date. Don't go on supplying customers who do not pay their bills.

Your business stationery

Ask your local printers to produce some invoices for you for your business 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.