Your payment obligations under control

1. Make a liquidity budget

Do you want to keep or bring financial peace to your business? Then you need to know your cash position every week. Ask yourself if you can pay all the bills with your business's money that week. How do you get that overview? You make a liquidity budget.

You start with today’s bank balance. Below that, list all the income you expect per day, followed by the expenses you plan to make. So: your opening balance + your income – your expenses = your liquidity position in that period.

Do this for a few weeks or even a few months in advance. As long as your income (orders) and expenses are clear. An outcome with a plus is fine, but a minus requires you to take action. Look at possible adjustments and whether additional funding is needed.

2. Explore your options

After you have prepared the liquidity forecast, assess your debtors, creditors, any inventories, and your private expenses. In the next steps, you will analyse your payment obligations and any possible room you can create. Think, for example, of deferring repayments to your bank. A bank is also just a creditor.

3. Contact your debtors

Are your debtors still able to pay you within the agreed term? Contact them to learn about their situation. Consider giving a discount if they can pay you sooner. For example, for entrepreneurs with customers they heavily depend on. This of course costs money, but you secure liquid assets for yourself.

Many large companies work with purchase order (PO) numbers. Do not wait until the order ends but arrange a purchase number well before you send your invoice. Do you not receive the PO number on time? Then it might take some time before you get this number, and can send your invoice. So always ask your client how this process works with them.

For longer assignments, you may be able to work with partial invoices. This can be more favourable than a down payment in advance and an invoice at the end of your assignment.

A financing option specifically for debtors is factoring. With this form of debtor financing, a factoring company finances your debtors, also known as advance payment. The factor pays your outstanding invoices, so that you immediately receive the amount of the invoice. Of course, you pay the factor a fee for this.

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4. Assess your inventory position

Do you keep inventory? Then make sure that it is workable for a certain order period, but minimise it. Inventory costs money. Agreements with your suppliers about delivery times will help you with this. Telling your customer 'no' every now and then should not be a problem. As long as you inform them when you do deliver. Calculate what this means for your liquidity position. After all, that is the reason to assess your inventory position.

5. Check who you owe money

Now that you have a handle on your debtors and inventory, assess your creditors. Which parties does your company owe money? Divide your creditors into equal groups:

1. Suppliers of goods and services related to your primary business process, your trade.
2. Suppliers of goods and services for your business organisation, such as energy suppliers and telephone companies.
3. Your landlord or your mortgage supplier.
4. The Tax Administration, municipalities, and other governmental departments.
5. Staff. Permanent, temporary, flexible, etc.

Making arrangements with creditors

Check per creditor group whether you can make agreements about payments and whether you can use or set up payment schemes.

• Group 1: You may be able to come to a payment arrangement with these creditors, such as drawing up a payment plan. This means that you agree to spread the total amount you owe them over a longer period. For example, instead of €10,000 in one payment, you pay €2,500 in the next 4 months.
• Group 2: These kinds of suppliers often offer subscriptions. Assess whether these subscriptions are still of added value for your company. Revise your subscription and remove any extras you do not really need.
• Group 3: With these creditors you may be able to agree to temporarily reduce the fee or pay a month later. 
• Group 4: The Netherlands Tax and Customs Administration, municipalities, and other governmental departments have payment arrangements. For example, the Tax Administration and municipalities have an extension scheme. In addition, the government has the Bbz scheme. You can request this temporary income support for the self-employed and SMEs from your municipality.
• Group 5: Your staff is important for your business, so take good care of them. Do you have insufficient work for your staff and need to dismiss them? Then learn about the dismissal procedures and protections.

6. Private expenses

What you do for your company, you can also do for your private situation. So prepare a private budget for the coming period as well. It will differ per individual which expenses are deemed essential, important, or not necessary. Go through your subscriptions and assess whether you are paying for something that you hardly or do not use.