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Effective cashflow management is as critical to business survival as providing services or products.

Below are some of the key methods to help reduce the time gap between expenditure and receipt of income.

Customer management

• Define a credit policy that clearly sets out your standard payment terms
• Issue invoices promptly and regularly chase outstanding payments. Use an aged debtor list to keep track of invoices that are overdue and monitor your performance in getting paid
• Consider exercising your right to charge penalty interest for late payment
• Consider offering discounts for prompt payment
• Negotiate deposits or staged payments for large contracts. It's in your customers' interests that you don't go out of business trying to meet their demands
• Consider using a third party to buy your invoices in return for a percentage of the total

Supplier management

Ask for extended credit terms.

Giving your suppliers incentives such as large or regular orders may help, but make sure you have a market for the orders you're placing.

Alternatively, consider reducing stock levels and using just-in-time systems.

Taxation

You may be liable for several different taxes including income tax, corporation tax, VAT, business rates and stamp duty.

It is important to keep good records to help you calculate your liability and complete your returns accurately.

If you are registered for VAT, it makes sense to buy major items at the end rather than the start of a VAT period.

This can often improve your cashflow, because you can set the VAT on the purchase off against the VAT you charge on sales.

This may help plug a temporary cashflow gap.

HM Revenue & Customs (HMRC) has launched a support service to help businesses struggling to meet tax, National Insurance or other payments owed to HMRC.

If you are concerned that you may not be able to pay amounts that are owed or will soon be owed to HMRC, you can contact the HMRC Business Payment 兔子先生 Service (BPSS). HMRC staff will review your situation and discuss temporary payment arrangements tailored to your business' circumstances.

You can contact the HMRC Business Payment 兔子先生 Service Helpline on Tel 0845 302 1435 or visit .

Asset management

Consider leasing fixed assets like equipment, or buying them on hire purchase.

Buying outright can result in a huge drain on cash in the first year of business.