Most people don’t understand the importance of cash flow, but whether you’re an employee, a property investor or a business owner, cash is vital and is the most important part of financial flows.
If you don’t have enough cash to pay your bills, whatever you do to earn money, then you’re bust! So it’s good to see reported in Sky news today that the prompt Payment Code is to be strengthened. This Code makes large purchasers pay small suppliers promptly and up until now has been set at payment in 60 days, but now is about to be reduced to 30 days from July.
Companies that sign up to the Code will have to ensure that they pay 95% of suppliers who have fewer than 50 employees within 30 days.
It’s a great initiative because small businesses are suffering with Covid restrictions and can decide to provide supplies to those companies signing up to the Code.
However signing up to the Code is voluntary and some major Companies have been suspended for non compliance but I’m very glad to say that some Companies are going further and Tescos have offered immediate payment to small suppliers for the next year. And whether you’re a small business or whether you’re an employee or an investor make sure that have enough cash in the bank to keep yourself solvent.
If you want to learn more about cashflow, take a look at our income and expenditure online modules.