5 Steps to maximise cashflow in your business

The 5 Steps to maximise cashflow in your business

• Ensure that you have sufficient working capital
• Manage customers and supplier
• Set yourself a budget
• Try to build in flexibility to react to changes
• Manage or, where possible, ensure against big risks

1. Working Capital

At the outset of the business, secure adequate working capital from personal funds, loans, grants, or outside investors to support the business. Going forward, utilise profits within the business, don’t withdraw too much, therefore risking cashflow problems.

2. Customers vs Suppliers

Try to match the credit terms of your customers with your production cycle and the credit terms you are offered by suppliers. If this is not possible then consider invoice financing to improve the business cash flow. Remember this is a balancing act and you need to be able to trade between customers and suppliers.

3. Draw up a realistic budget

Once you know what you need to spend on a monthly basis and try to stick to it. If possible build in some headroom to provide for emergencies. An emergency is likely to crop up at some point and the headroom funds can be used to plug short term cash flow gaps.

4. Flexibility

Consider how you operate, the types of premises you need, and how you occupy these, is it owned long or short term lease or serviced office space. Use the same process with equipment. Compare the costs of each possibility now and going forward.

5. Manage risk

Monitor customers’ accounts and try to keep them up to terms and set credit limits. Seek out debt insurance for main customers. Ensure the company has adequate and appropriate insurance overall.

Alternative option

Finally, consider alternative options. If you try all of the above steps and still cannot financially manage, seek advice on what options are available to your business.