Industry sector: Retail and wholesale

Shoe shop: 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.

Decide whether you will offer account facilities, and if so who will be eligible.

Your account customers may be both members of the public who take advantage of credit terms you offer or local businesses, for example, buying protective footwear from you on trade terms. If you sell such things as specialist climbing, cycling or dancing shoes, you might offer credit terms to clubs and associations.

Offering credit can increase sales, but remember that chasing up overdue payments can be time consuming and stressful.

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. Don't go on supplying customers who do not pay their bills.

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.

Checkpoints