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As a business owner or director, it’s very easy to become too focussed on your bottom line. Profit however, is the end result, and you can only optimise this result with prudent cash flow management.

Cash flow is the amount of money being transferred into, and out of, a business.

Start-ups and fast-growing companies are most likely to have cash flow problems, as balancing uncertain revenue with labour costs, high overheads and often limited access to credit can prove difficult. In fact, poor cash flow is the predominant reason why new businesses fold in their first eighteen months.

These businesses are not alone. 41 per cent of SMEs report cash flow problems that can lead to an inability to make payroll, lack of reinvestment, accrued debt and loss of clients.

Cash flow management takes more than just keeping the odd eye on your accounts. Your finance, senior management and client-facing teams need ongoing assessment and a proactive approach to ensure your business avoids ‘the red’.

We have put together our top ten tips to optimise your cash flow management so you sustainably reap rewards.

Stay on Top

Keep your accounts orderly and up-to-date. You want to have to hand an accurate and clear snapshot of your business’ financial position at any given time.

Look Ahead

Anticipating your future needs as accurately as possible will help maintain positive cash flow. Don’t calculate your annual forecasts and leave them in a drawer all year. Use a combination of your year-to-date (YTD) and prior month performance to readdress and adjust your forecasts in line with actual performance.

Accelerate Inflows

Invoice customers when goods are delivered rather than at month end. Contact delinquent payers early on and refuse future orders from overdue customers. You could offer early payment discounts, but this is a short-term fix rather than long-term strategy.

Decelerate Outflows

Delay paying your vendors as much as possible while keeping to the terms of the sale. Ensure you keep a good credit rating and amicable relations but slow down your outgoings as much as possible.

Build Connections with Lenders

Accessing credit is near impossible when your business is underperforming or worse, not meeting payments. Building good and trusting working relationships with lenders before, rather than when you need help, gives you a greater chance of accessing credit.

Don’t Just Sit on It

Providing inflation increases, the value of your cash reduces over time. Rather than leaving your cash in a non-interest-bearing account, use some for short-term investments or move some to a savings account.


Ensure your customers or clients pay a deposit on order rather than waiting for full payment upon delivery or month end. This provides greater security as customers are more likely to pay.*


Create and enforce strict policies regarding payment terms, overdue fees and where applicable, how much and to whom you should offer credit. Consider subscribing to a credit check service so that you can assess your customer’s ability to pay.

Accept Multiple Payment Options

Allowing your customers to pay in a variety of methods makes it easy for them to pay you. It might incur time on your part, perhaps going to the bank to cash a cheque, but it will keep customers happy and ensure you get paid.

Diversify your Customer Base

Having a broad range of clients and customers from different sectors protects your business from industry-specific market disruption.

*Fact to note: if an invoice exceeds its due date by more than 90 days, there is only a 50 per cent chance it will get paid in full!