Even the most successful small businesses can face cash flow issues.
It’s not always a lack of sales that causes trouble, it’s often timing, planning, or unexpected expenses.
The good news? Most cash flow problems are fixable once you know what to look for.
In this post, we’ll walk through seven common cash flow problems UK business owners face, plus practical tips to overcome them.
1. Late Payments from Customers
This is the number one cash flow killer.
You might have invoiced £10,000 last month, but if none of it has arrived in your bank account, your bills still go unpaid.
How to fix it:
- Send invoices promptly and include clear payment terms
- Use 7 or 14-day terms instead of the standard 30 days
- Set up automatic payment reminders
- Offer incentives for early payment or use invoice factoring if needed
At Legacy Figures Accountancy, we help manage your finances including chasing late invoices.
Want to learn more? Let’s have a chat.
2. Too Much Money Tied Up in Stock
If you buy stock that sits on the shelf for weeks or months, you’ve tied up your cash in unsold products.
How to fix it:
- Track stock levels and reorder based on demand
- Use lean inventory systems or dropshipping
- Offer discounts to clear slow-moving items
3. Spending Before the Cash Arrives
It’s easy to feel flush after a great sales month and spend too soon.
But if those sales were on credit terms, the cash might not arrive for weeks.
How to fix it:
- Wait for cleared funds before making large purchases
- Review your budget monthly and match spending to actual bank balance
- Build in a cash buffer for expenses
4. Seasonal Revenue Dips
If your business is seasonal, cash flow can dry up in the quiet months, sometimes right when bills are still due.
How to fix it:
- Forecast income and expenses across the full year
- Save a portion of profits from busy periods
- Negotiate payment plans with suppliers or HMRC if needed
5. Not Setting Aside Tax and VAT
It’s easy to forget that part of the money in your account isn’t really yours.
Come VAT or tax deadline, many businesses scramble to find the funds.
How to fix it:
- Open a separate account just for tax savings
- Set aside 20%–30% of all income as it comes in
- Use accounting software to estimate your tax liabilities in real time
6. No Cash Flow Forecast in Place
If you don’t know what’s coming in and going out next month, it’s hard to prepare.
Lack of planning is a major contributor to cash flow surprises.
How to fix it:
- Build a simple monthly cash flow forecast (even in a spreadsheet)
- Include all known income and expenses
- Review it regularly and update based on actual figures
7. High Fixed Costs
Some businesses take on high monthly costs, like subscriptions, rent, or payroll, without checking if they’re sustainable.
How to fix it:
- Audit your expenses every quarter
- Cancel underused services
- Consider switching to variable cost models (e.g. freelancers vs full-time staff)
Final Thoughts: What’s Best for You and Your Business?
Cash flow problems don’t mean your business is failing, they just mean it’s time to adjust how money moves through your business.
With good systems, smart planning, and a few simple changes, you can smooth out the peaks and troughs and keep your business on solid ground.
If you’d like help reviewing your cash flow, forecasting for the months ahead, or getting paid faster, we’d love to help.
If you have any questions or need some guidance, get in touch today for a friendly, no-obligation chat.
