Prioritised payment list

Your phone is ringing off the hook with irate suppliers, payroll is coming up and the MD is pulling his hair out because your cash flow is consistently under pressure. How can you make sure that your department pays suppliers in the right order?

Prioritising

This scenario is very common, particularly in the current economic climate. But don’t panic - there are some simple steps that you can take to regain control of what appears to be a downward spiral. Firstly, gather information about your business’s current suppliers in order to establish a Prioritised Payment List.

List all of the payments you need to make to suppliers, for payroll, to the Taxman, your landlord etc. and schedule them by due date. Use headings such as “Frequency” and “Normal terms” to record your data.

Then prioritise the payments. There will be many that you can delay and some you can’t, such as payroll, phone bills etc. Use a simple priority coding system such as A, B and C as follows:

Improving cash flow

Go back to your prioritised payment list and approach selected suppliers and creditors for extended terms. For example:

Asking HMRC for extra time to pay your PAYE and VAT by calling 0845 302 1435. It’s far better to agree this upfront than ignore a payment demand so one of its collection agents come knocking.

Asking your landlord if you can pay the rent monthly instead of quarterly in advance.

If you agree extended terms, make sure you honour them so that you don’t lose credibility with your suppliers. Record these on your prioritised payment list too.