Probably that too
My comment comes from a discussion I had with my bank manager when doing a credit risk assessment on the government funded hospital sector about a month ago. I ended up walking away from a R1.5 million deal over three years as a result, but amongst the high risk sectors mentioned in that little chat was that one word, "electrical."
I could go into quite a bit of detail as to why the concern is probably valid - there are huge challenges in the electrical contracting industry even at the best of times - but perhaps in another thread; let's stick to keeping in your bank's good books. Or maybe that should be how easy it is to fall
out of favour with your bank.
I suggest a few habits that will help.
1. Only draw from cleared funds. Don't count on cheques from your clients as cleared for at least 48 hours, and preferably at least 7 days. And make sure that any one unpaid cheque won't put you over your limit -
ever!
2. Never draw on funds the same day it is deposited, even if it
is cleared funds such as an internet transfer. Yes, that means you'll probably never push your account to the absolute limit, but that 24 hour safety margin is as close to the edge you ever want to get.
3.
Never write a cheque unless you have the funds to cover it. And I mean
cleared funds already in the account. If you face the choice of writing a bad cheque or getting your kneecaps broken, take the broken kneecaps. They're going to get broken anyway when the cheque bounces, so you may as well take the pain now.
4. Check your bank balance every day. Know exactly what you have available all the time.
5. Spend some time working out your monthly cashflow cycle. When does the money go out? When does the money normally come in? If you're signing a debit order this information is invaluable when you've got the option of choosing a date for the debit order to run. Knowing what's coming in and what has to go out means you know what is really available as your discretionary spend.
6. Understand yourself! If you have trouble with impulse buying, don't go shopping until you've paid
all the accounts that need to be paid
before you go shopping.
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