5 simple ways to improve your cash flow


Britain’s late payment crisis is continuing to cause cash flow concerns with half of small businesses operating in the red, according to new data.

The latest Small Business Insights, published by Xero, revealed that only 49.5% of businesses were operating in positive cash flow last year.

This has been linked to the fact that up to 15% of small business turnover could now be tied up in late invoice payments.

So what’s the solution?

Incomings and outgoings can be highly variable throughout the year, so negative cash flow doesn’t always mean trouble.

But a lack of working capital can hamper growth and limit productivity, which is why a healthy cash flow is so important.

So, to help you improve your chances of success, here are five simple ways to improve your cash flow

1. Improve your credit management

When late payment is squeezing cash flow, focusing your efforts on improving your credit management can reduce the length of time between providing a service and getting paid for it.

The first step to improving your credit management is to review your entire credit management process and figure out where the pitfalls are.

For example, if your invoices aren’t being received you should review your invoicing process and ensure that all records are correct and courtesy calls are made to confirm receipt.

If you have lots of overdue invoices that remain unpaid for long periods, you should review your late payment procedure to ensure you’re doing all you can to encourage prompt payment.

You might want to consider outsourcing all your old debts to a commercial debt collection agency so that you can focus your attention on newer invoices.

Unfortunately, not all businesses have the time or resource to dedicate to effective credit control.

If this is the case for your business you could outsource the task to the experts, who will use their extensive experience to deliver the best results for your business.

2. Raise funding

Alternatively, another way to bridge the cash flow gap which arises from trading on credit terms is to raise additional funding.

If you’re looking for a temporary fix you could talk to your existing bank and extend your existing credit facility or seek a short-term loan.

Or, if negative cash flow due to late payment is a regular occurrence, you could benefit from specialist funding solutions such as invoice finance.

Invoice finance allows businesses to quickly access the working capital tied up in its sales ledger by releasing up to 90% of an invoice’s value within 24 hours.

This provides the necessary cash to fulfil new orders, meet day-to-day commitments and secure early settlement discounts with suppliers before receiving payment for products or services.

And then when the customer pays, the remaining balance of the invoice is made available minus a service fee.

For more funding options to consider take a look at these 10 ways to fund your business.

3. Reduce expenditure

Whilst late payment is one of the top causes of cash flow shortages, spending more than you can afford is another common way to end up in the red.

Therefore, disciplining your spending could be a quick way to improve your cash position.

Analyse your expenditure to get a clear picture of your incomings and outgoings. Then look at each individual outgoing and consider the cost-benefit of every expense. Do the ends justify the means?

This can be a good way to determine what is fundamental to your success and what can be cut without negatively impacting your business.

In the future, keep track of everything that you’d like to purchase and the potential costs involved. Then prioritise these purchases in order of which will have the greatest positive impact on your business.

This can help to prevent you from overspending on unnecessary items.

4. Improve your financial planning

Whether it’s a late payment, an unexpected bill or a slow sales month, there are a number of things that could arise unexpectedly and damage your cash flow.

Fortunately, with effective financial planning, you can spot cash flow shortages before they occur so that you are in the best position to navigate these obstacles.

This forward planning will allow you to put plans in place to protect your cash flow before it becomes an issue.

Take a look at this guide to forecasting, planning and budgeting for more tips on how to successfully manage your business finances.

5. Negotiate better deals

Many businesses find a supplier and then stick with it regardless of any price increases. But this could mean that you are paying over the odds for products or services that you could get elsewhere.

Benchmarking your existing suppliers could reveal areas where you can make savings. This task should be performed regularly to ensure that you are always getting the best deals for your money.

But remember that whilst getting a cheaper deal could improve your cash flow, it’s important not to sacrifice quality as this could have a negative impact on your business.

Here are 5 key areas to look at to save your business money. Could you make any savings?

To discover how Hilton-Baird Financial Solutions can help you to improve your cash flow, contact us on 0800 9774833 or request a call back.


Some of the funders we work with

  • Regency Factors
  • Metro Bank SME Finance
  • Accelerated Payments
  • Optimum Finance
  • Santander Corporate & Commercial
  • MaxCap
  • InvoCap
  • PNC Business Credit
  • Royal Bank of Scotland
  • Lloyds Bank Commercial Finance
  • Berkeley Trade Finance Ltd
  • Blazehill Capital
  • Peak Cashflow
  • Sonovate
  • Tradeplus24
  • Castlebridge
  • Ultimate Finance Group
  • Barclays
  • Pulse Cashflow Finance
  • Partnership Invoice Finance
  • IGF Invoice Finance
  • ABN AMRO Commercial Finance
  • Aldermore Invoice Finance
  • Roma Finance
  • eCapital Commercial Finance
  • Clear Factor
  • Investec
  • Praetura Invoice Finance
  • Giant
  • Haydock Finance Ltd
  • Merchant Money
  • Cynergy Business Finance
  • Leumi ABL
  • Kriya
  • Woodsford Tradebridge
  • Team Factors
  • Davenham Trade Finance
  • Davenham Asset Finance
  • 4Syte
  • Time Finance
  • Close Brothers Invoice Finance
  • Nationwide Finance
  • Skipton Business Finance

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We are a credit broker and not a lender and offer credit facilities from a panel of lenders