Top 6 tips to enhance your business cash-flow

In the current climate many businesses are struggling to generate enough cash to increase their daily working capital and service their debts.

In order to maintain a healthy business cash-flow, it’s essential you choose the right financial strategies for your business because without enough money to cover your business expenses today, you risk losing the chance to earn larger profits in the future.

This seems like simple advice, yet around 75% of small businesses that fail do so because of poor cash management within their business and not because they don’t make a profit. To help enhance your cash-flow, we’ve put together the 6 helpful tips…

1.    Just Starting Out?

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For ‘new-start’ and developing businesses, it can be challenging to secure the appropriate funding from your bank. Business planning with an expert can help you to gain strategic advice and a robust business plan outlining your business strategy, viability, risks, management strengths, and market potential. A credible business plan will enable you to secure loans, private equity, and commercial funding, and even grants, whilst helping you to achieve your business objectives.

There are many sources of funding available to support start-up and young businesses if the business model is viable and can be evidenced through the appropriate Business Plan.

2. Say “Yes” to Accountancy Services

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It is a fundamental need for every properly managed business to maintain up to date records of its financial transactions, whether it be sales and purchase ledgers, invoicing customers, paying suppliers, or simply meeting the legal and tax obligations on an annual basis. An accountant can review cash-flow projections and results, provide insights into areas that you may have overlooked, and help you anticipate and plan for cash-flow challenges, making their services an investment to your business rather than an expense.

3.  Shorten your Receivables, Lengthen your Payables

Cash-flow can be enhanced by speeding up your receipt of cash. This can be achieved by shortening your payment terms from, for example, 60 days to 30 days and by sending out invoices immediately after your goods or services are delivered.

Negotiating better credit-days with your suppliers also retains cash in your business for longer and shortens the gap between payments going out and income.

4. Use Cash-flow Finance to fund your growth

Where ‘Receivables’ cannot be shortened or ‘Payables’ cannot be effectively extended, ‘Trade Finance’ allows a business to grow its sales ledger without the additional cash-flow pressure of the up-front payments to its own suppliers by making payment directly to those suppliers. These facilities effectively 'bridge the gap' between placing orders with suppliers and getting paid by customers.

‘Debtor’ finance enables a business to raise immediate funds secured against the future income from invoices issued to customers, thus accelerating a significant portion of the future income value of the invoice.

By complementing ‘Trade Finance’ with a product from the Invoice Finance family, your business can generate cash at both ends of the supply process.

5. Get a Business Finance Health Check

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A business financial health check can provide you with a more in depth analysis of your cash flow, highlighting the cyclical highs and lows of your business and allowing you to time your borrowings, organise the right number of staff, and plan when to boost your marketing efforts (ideally in the quieter periods).

6. Invest in your Business

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If you’re looking to invest in or expand your business with the use of commercial assets, be it commercial vehicles, machinery or otherwise; asset finance helps you to acquire them whilst supporting the expansion of your enterprise. By gaining asset finance, you can retain cash in the business, assisting your ‘cash cycle’. Additionally, you can offset your asset finance repayments against the income generated.

For more business cash flow solutions contact us today. We are able to provide business customers with structured funding options to improve cash-flow, reduce debt servicing, and increase profitability.

16th OCT