Increase cashflow and improve your business resilience

  • 5th October 2020

With such turbulent and unpredictable economic pressures on business, now is the time to ensure that you have a resilient plan for the future.

Many businesses have had to adapt to survive whilst others have had no choice but to just hang in there and hope they can come out of the other end. One thing is for sure however, we need to be much more resilient and responsive.

Businesses are faced with a whole plethora of challenges in the fight to safeguard their operational viability, protect their workforce, and retain and nurture their client relationships.

For many SMEs, the risk of running out of money is higher than ever. As we are getting up and running again, some SMEs have had to dip into their reserves and with very little or no revenue in the past few months, some may have fully depleted their safety buffer as businesses have had to renew or replenish their stock and invest in marketing as customers begin to need their services again.

Although Government support schemes have provided a short term fix, many of these business now face a very fragile economy as we hit the winter months.

Work with your suppliers

Whilst your suppliers are probably in the same position as you with regards to managing expenditure, it is definitely worth having a conversation with them about payment terms. Can you extend your payment terms? You may want to consider revising your stock levels or place orders on a ‘just-in-time’ basis. Another option is to see if you can operate on a sale or return basis.

Also look to pay suppliers using a payment card, this will give you extended periods of credit and with some suppliers, you may benefit from early payment discounts. Always try to ensure you settle your payment card to avoid unnecessary interest rates on the debt.

Payment terms for customers

Can you offer enhanced payment options to your customers such as early payment discounts. This will not only help to get money in quicker but will reduce the administrative burden of chasing debts. Also can you offer regular monthly payments for your product or service? Can you encourage any of your clients to pay be card rather than on invoice? This will help to get payment upon delivery and you may also be able to negotiate better terms with your card processing service provider.

Are you benefitting from using faster payments through your bank? This method allows you to delay bill payment right up to the deadline as the transactions are processed in minutes and keeps the money in your business for as long as possible.

Timing your payments

You need to think about your VAT periods and whether it is worth accelerating purchase invoices and deferring invoicing (not payment dates) to improve your cashflow. Look at what is in your pipeline and try to project the liability. Again this will help to streamline and balance your business cashflow.

For any business, you cannot underestimate the value of expert advice, especially in times like these. Cashflow projections, forecasting and strategic business planning are all going to be critical to our survival.

We can help. If you would like to discuss how we may be able to assist you, please do get in touch for a no obligation initial discussion.

All data and figures referred to in our news section are correct at the date of publishing and should not be relied upon as still current.