Running a small business in the UK comes with its fair share of challenges, and cash flow is often at the top of the list.
Even if your business is profitable on paper, a lack of cash can make it tough to pay bills, pay staff, or invest in growth.
The good news? There are practical steps you can take to improve your small business cash flow and keep your business moving in the right direction.
Here are seven simple but effective strategies that can make a real difference.
1. Stay on Top of Invoicing and Payment Terms
Getting paid on time is crucial.
Send invoices promptly, set clear payment terms (like 14 or 30 days), and follow up with friendly reminders before payments are due.
If necessary, tighten up your payment terms with customers to avoid waiting too long for cash.
If needed, have open conversations with your suppliers to negotiate better payment terms or discounts that give you a bit of breathing space.
2. Keep an Eye on Your Expenses
Sometimes it feels as though money goes faster than it comes in!
Regularly review your business expenses to see where you can cut costs.
Subscriptions you no longer use, supplier contracts that could be renegotiated, or utilities that could be switched to cheaper providers can all add up.
By trimming unnecessary spending, you free up more cash to keep your business running smoothly.
3. Build a Cash Reserve
Having a cash reserve, even a small one, can be a lifesaver when times are tough.
Set aside a little each month so you’ve got a cushion for unexpected costs or lean periods.
It takes discipline, but it can give you peace of mind knowing you’ve got something to fall back on.
4. Use Accounting Software
Good bookkeeping is essential for cash flow management.
Accounting software makes it easier to track invoices, monitor income and expenses, and generate reports that help you make informed decisions.
It also helps you spot late payments quickly so you can chase them up before they cause problems.
At Legacy Figures Accountancy, we focus on your finances so you can focus on your business.
Want to learn more? Let’s have a chat.
5. Offer Flexible Payment Options to Customers
Offering flexible payment options like direct debit, online payments, or card payments can make it easier for your customers to pay you on time.
The easier you make it for customers to settle invoices, the quicker you can get the cash into your business.
6. Have the Right Bank Accounts in Place
Having the right bank accounts is key to keeping your cash flow healthy.
When your business finances are well-organised, it’s easier to see what’s coming in, what’s going out, and how much you have available for spending and saving.
This clarity helps you make smarter decisions and avoid surprises that could disrupt your business.
We believe there are 5 Bank Accounts all small businesses need.
7. Review Your Pricing Strategy
Sometimes cash flow issues stem from not charging enough for your products or services.
Take a look at your pricing structure and make sure it covers your costs and allows for a healthy profit margin.
Don’t be afraid to adjust prices if needed to reflect the value you provide.
We appreciate it’s easier said than done but continuously reviewing your offer is part of doing business.
Final Thoughts: Take Control of Your Cash Flow
Cash flow can make or break a small business, but with the right strategies, you can keep things steady and stress-free.
At Legacy Figures Accountancy, we help small business owners like you take control of their finances and plan for a healthy cash flow.
If you’d like help getting your cash flow back on track, get in touch today for a friendly, no-obligation chat.
