Improving cash flow usually isn’t about one big fix. It’s a handful of small, sensible changes that add up. These are the ones that tend to make the biggest difference for owner-managed businesses, grouped by where the cash is hiding.
Get paid sooner
- Invoice straight away. Send the invoice the day the work is done or the goods go out, not at the end of the month. Every day you wait adds a day to your payment cycle.
- Agree clear terms up front. Put your payment terms in writing before the work starts, so there are no surprises later.
- Make it easy to pay. Put your bank details on every invoice, offer a payment link if you can, and include the customer’s purchase order number so the invoice doesn’t get stuck in an approval queue.
- Chase early, politely and consistently. A reminder a few days before the due date and a call the day after it’s missed work far better than a stern letter weeks later. Our guide to late payments sets out a simple routine.
- Take deposits or stage payments on larger jobs, so you’re not funding the whole project yourself.
- Offer direct debit or card payments to regular customers, so money arrives on time without chasing.
Pay out more carefully
- Use your supplier terms. Pay on the due date rather than the day the bill arrives, as long as it keeps the relationship healthy.
- Talk to suppliers about better terms, especially if you’re a reliable, long-standing customer.
- Keep stock lean. Stock sitting on shelves is cash you can’t spend. Review slow-moving lines and order little and often where you can.
Use the right schemes and prices
- Look at the VAT Cash Accounting Scheme. If your VAT taxable turnover is £1.35 million or less, you may be able to pay VAT on your sales when customers pay you, rather than when you invoice them. Check the eligibility rules on GOV.UK or with your accountant.
- Review your pricing regularly. If your costs have risen and your prices haven’t, cash flow feels it first. Small, regular reviews are easier for customers than one big jump.
See it coming
- Forecast ahead. None of the above helps if you only discover a shortfall the week it happens. A rolling 13-week forecast shows the pinch points early, while you still have options. Here’s how to create one.
The quickest cash you’ll ever find is usually sitting in your unpaid invoices.
If cash is already tight
If you can see a shortfall coming, act early. Talk to your bank before you need them, prioritise essential payments such as wages and tax, and if a tax bill is the problem, contact HMRC before the due date to ask about a Time to Pay arrangement. Early conversations nearly always go better than late ones.
Want a second pair of eyes on your numbers? Start with a free cash health review.
An accountant of ten years who has built more cashflow forecasts than hot dinners. I help owner-managed businesses see what’s coming and plan for it. More about me.