Cash flow is the lifeblood of any small business. Even if your business is profitable on paper, poor cash flow management can lead to missed payments, stunted growth, and even insolvency.
Here are key tips to help UK small businesses manage cash flow better:
- Monitor Cash Flow Regularly: Use accounting software to track incoming and outgoing cash in real time.
- Invoice Promptly: Don’t wait until the end of the month to send invoices. The sooner you bill, the sooner you get paid.
- Set Payment Terms Clearly: Encourage prompt payment with terms like 7 or 14 days. Consider offering small discounts for early payment.
- Chase Late Payments: Automate reminders and follow up persistently on overdue invoices.
- Keep a Cash Buffer: Always aim to have at least 2–3 months of expenses saved as a cushion for emergencies or slow periods.
- Review Expenses Regularly: Identify recurring costs and cut unnecessary ones to protect your cash position.
Proper cash flow management not only helps you stay afloat—it allows you to invest confidently in new opportunities. An accountant can help forecast future cash flow and build strategies to maintain a healthy balance.
