Tips for improving small business cash flow

Cash is the lifeblood of any business. Balancing working capital is an ongoing commitment and constant attention is required. Here at CHW Small Business Accountants Bolton we understand the importance of healthy cash flow and we’ve put together a few pieces of advice to help you manage it better.

Cash flow forecasting

Forecasting cash flow is essential for every business. Technology can help you monitor this – software tools are available which highlight forthcoming dangers by comparing customer payment histories with how long you can defer making payments.

Accounts receivable and payable, credit terms and your stock levels all influence cash flow. With analytical insight into each of these, problems can easily be identified and resolved more quickly.

Get paid!

You can only have a healthy cash flow if you get paid and here are a few ways you can speed things up.

Early payment discounts can get things moving and credit checks on new clients can give you an indication of how likely you are to get paid on time.

Always state payment terms at the outset. “Due upon receipt” is used so often but isn’t usually effective. Being more realistic such as requesting payment within 20 days is more likely to get money moving more quickly towards you.

If you sell products and services through your website, make sure that it’s working properly and optimised for desktop and mobile device formats.

Make sure your customers can pay you easily. Instant online card payment services such as PayPal support seamless and speedy cash transfers.

Monitor pricing

It’s easy to get carried away when growth occurs, but keeping a cautious eye on your pricing and increasing costs will help you to anticipate cash flow problems.

It’s tempting to put off price increases at the risk of losing customers but small hikes are actually expected and will usually be respected by those who buy from you.

Change suppliers

Even if you require certain specialist products and services from one seller, it doesn’t mean you have to stick with that supplier when it comes to more everyday items.

Huge savings can be made if you spread your purchases across different sellers, industry catalogues or cheaper providers.

When it comes to your own stock, aim not to carry too much. Whilst you may be offered large discounts on bulk buying, your suppliers have their own interests at heart, not yours. Do regular stock takes and always look out for ways to keep stock levels to a minimum to boost cash flow.

Nicola Roby at CHW Small Business Accountants Bolton advises “Don’t panic. Cash flow issues are not unusual for small businesses. As your business grows, income and outgoings will understandably fluctuate. Conducting a full analysis of your cash flow though could help you to survive the bad times and put the good times to effective use.”

For advice on any issue relating to your small business contact the team at CHW Small Business Accountants Bolton on 01204 534031 or via our contact us page.


This article is for general guidance only. It provides an outline, and may not include points which are important to your situation. You should not depend on this blog without taking advice based on the full facts of your case. The information given was correct at the time of publication.

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