Cash flow problems rarely have a single cause. They usually build up from small delays across the business: an invoice sent late, a customer who was never chased, stock that sat on the shelf, a cost nobody reviewed. The good news is that many of those delays are within your control.
This guide sets out the practical levers directors can pull, roughly in the order most businesses find useful. Funding comes last, not because it is unimportant, but because it works best once the basics are in place.
Get paid sooner
The quickest gains often come from the sales ledger.
Invoice promptly and accurately. Raise invoices as soon as work is delivered or a milestone is reached, not at the end of the month. Check each one before it goes out. A missing purchase order number, wrong address or unclear description gives a customer a reason to delay.
Run a consistent credit control routine. Decide who chases overdue invoices, when and how. A simple sequence works well:
- a reminder shortly before the due date
- a call or email soon after it passes
- escalation to a named contact if payment still has not arrived
Keep a record of every conversation. Consistency matters: customers often prioritise suppliers who chase reliably.
Set clear payment terms. Agree terms before work starts and put them in writing. For new customers, consider credit checks and sensible credit limits. Deposits, stage payments or payment on account can suit larger or longer jobs. Make paying easy by putting bank details on every invoice and offering the payment methods your customers prefer.
Manage what goes out
Agree workable supplier terms. Ask key suppliers whether longer terms are available, particularly where you have a good payment record. Then pay on the agreed date rather than early. Paying late can damage relationships and affect your own credit standing, so the aim is predictability, not delay.
Keep stock in line with demand. Stock is cash sitting on a shelf. Review slow-moving lines regularly, reorder based on actual sales patterns and be cautious about bulk buying unless the saving clearly outweighs the cash tied up.
Review costs regularly. Go through bank statements line by line from time to time. Look for:
- subscriptions and software licences nobody uses
- contracts that have rolled over without review
- recurring costs that could be renegotiated or retendered
Cutting cost is not always the answer, but knowing exactly where cash goes is.
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Forecast your cash
A cash flow forecast is one of the most useful tools a director can have. It shows when cash will come in and go out, and where the pinch points are likely to fall.
Keep it simple. A spreadsheet listing expected receipts and payments by week or month is enough for many businesses. Include the large, irregular items that cause most surprises: VAT, corporation tax, PAYE, insurance renewals, loan repayments and annual licences.
Update the forecast regularly against what actually happened. Over time it becomes more accurate, and it lets you act early, whether that means chasing a particular debtor, delaying a purchase or arranging funding before the gap arrives rather than after. Your accountant can help you set one up if you do not have one already.
Where funding can help
Operational improvements can only go so far. Some businesses have a structural gap between paying costs and receiving income, particularly those that are growing, trade seasonally or sell on long payment terms. Your forecast is the best guide to whether funding would help and what kind.
A gap that recurs every month because customers pay on long terms points towards invoice finance, which releases cash tied up in eligible unpaid invoices. A gap that appears at particular times of year, or as stock and payroll grow ahead of sales, may suit working capital finance. A single large purchase that would empty the bank account is often better spread over time with asset finance.
Funding is not a substitute for good credit control or a reliable forecast. Providers will usually want to see both, and a business that understands its own cash position is better placed to choose the right facility. A commercial finance intermediary such as Emirex Finance can help you compare options, though the finance provider always makes the lending decision. For background on how cash moves through the business, see what is working capital.
Key points
- Invoice promptly and accurately, and chase overdue accounts on a consistent routine.
- Agree clear payment terms with customers and workable terms with suppliers.
- Keep stock and costs under regular review.
- Use a cash flow forecast to see gaps coming, and consider funding where the gap is structural.
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This guide is general information, not financial, legal or tax advice. Finance is subject to status, eligibility and approval by the relevant finance provider. Emirex Finance works with UK limited companies only and is not authorised or regulated by the FCA.