Cash flow challenges can have considerable ripple effects. Almost 1 in 7 small business owners in the UK have been left unable to pay employees on time, 38% have been unable to pay debts, and owners lose an average of £26,000 by turning down work because of insufficient cash flow.
 
But it’s not all doom and gloom. By implementing the right strategies, you can maintain financial stability and set your business on a path to sustainable growth. Here, we’re sharing practical advice – based on our years of experience supporting SMEs – to help you take control of your cash flow.
 

Understand your current position in the market

 
Before you can improve your cash flow, you need to know where your business stands financially. This means regularly assessing your cash flow statements to understand how money moves in and out of your business.
 
Start by identifying your key revenue streams and pinpointing areas of expense. Are there any surprises, such as unexpected costs eating into your profits? Evaluating your current position provides you with a solid foundation to build better financial strategies.
 
As the saying goes, “you can’t manage what you don’t measure”. Knowing your numbers is the first step toward achieving long-term financial health.
 

Analyse patterns in income to predict future trends

 
Cash flow management is as much about future planning as it is about the here and now. By analysing historical income, you can identify patterns and predict trends, giving you greater control over your finances.
 
For example, if you’re running a retail business, you’re likely to experience a spike in sales during the festive season – while things will tend to slow down in February, July and August. Spotting these patterns allows you to prepare for quieter months and capitalise on busier ones.
 
Using cloud accounting tools like KashFlow, QuickBooks or Xero to forecast cash flow will help you gain clear, actionable insights into your financial trends – enabling you to make informed decisions for the months ahead.
 

Optimise payment processes

Late payments can wreak havoc on your cash flow. Statistics show that 43% of SMEs spend roughly £4.4 billion in admin costs alone chasing unpaid invoices, with 34% relying on overdrafts in the meantime and 11% having to employ someone to chase on their behalf.
 
Streamlining your payment processes can make all the difference. Start by promptly invoicing clients as soon as work is completed. Set clear payment terms – such as 14 or 30 days – and communicate these upfront to avoid confusion. Digital tools, like invoicing software or automated reminders, can save time and ensure payments aren’t overlooked.
 
You might also want to explore demanding interest on late payments and rewarding those who pay promptly.
 

Identify and eliminate non-essential costs

Every pound counts when it comes to cash flow. Reviewing your expenses regularly can help you recognise non-essential costs that may be dragging your business down.
 
Consider cutting subscriptions or services you no longer use, reducing office rent by embracing hybrid working, or renegotiating supplier contracts. These small changes can lead to significant savings.
 
You can then redirect these funds into more strategic areas of your business – improving vital resources and ultimately giving your company a stronger financial footing.
 

Monitor and adapt regularly

 
Effective cash flow management isn’t a one-off task – it’s an ongoing process. You’ll know better than anyone that business environments are constantly changing. From economic shifts to customer demands, flexibility is key to navigating these challenges.
 
Adapting your strategies as circumstances evolve ensures you’re always prepared, no matter what comes your way. With this in mind, make a habit of reviewing your cash flow reports regularly to spot any red flags early on.
 

Simplify your cash flow management

Number crunching can feel overwhelming. And when they’re not adding up, a second set of eyes can bring the clarity you need – especially when they belong to an experienced financial professional.

At Nabarro Poole, we specialise in helping small businesses create personalised cash flow strategies. Let’s talk about yours.