Top tips for improving your cash flow

  1. Credit check customers before agreeing credit terms. By offering early payment and cash discounts, you will encourage customers to settle invoices quicker, reducing the risk of bad debts.
  2. If you are struggling to turn invoices into cash, employ a credit controller or debt collection agency to chase them on your behalf.
  3. Think about working with an invoice financing company to generate cash as soon as your invoices are raised.
  4. Invoice more regularly than once a month, and issue regular statements to any customers buying on credit.
  5. Encourage regular customers to set up standing orders on account of your invoices.
  6. Try to agree favourable credit terms with suppliers – holding onto your cash for longer frees up more working capital.
  7. If your business is VAT registered have you thought about switching to a VAT scheme designed to aid cash flow? The annual accounting and cash accounting schemes can be beneficial to businesses struggling to meet their quarterly VAT payments.
  8. Ensure your books and records are well kept and up to date - this is key to understanding what is happening financially within your business.
  9. Shop around!  Would a different bank offer you a better overdraft facility? A different insurance provider offer you a cheaper policy? Don’t renew without checking what the rest of the market has to offer.
  10. Invest any excess cash to generate an income, and remember to save for those upcoming VAT and tax payments.
  11. Carrying obsolete stock? Mark it down, free up some storage space and generate a cash contribution to your overheads.
  12. Prepare forecasts and cash flow projections - this will help you plan for times when you know cash flow will be a problem and avoid any nasty surprises.
  13. Above all - ask for help! Speak to an accountant who understands your business and its cash flow needs.

Danielle Holmes, Business Services Superviser