10 ways to boost your cash flow management

Experian have shared their ten simple tools SMEs can use to help tackle cashflow problems.


There are three ‘pillars’ of cash flow analysis which can be used to inform a positive cash flow plan. Once you have an understanding of the numbers under your own pillars you can apply these ten simple cash flow management tools.

1. Set a budget

This is the foundation of any enterprise. Carefully log your business’ expected earnings and outgoings to understand your budget before making any big financial decisions. By doing this you can easily see whether your cash flow is predicted to be positive or negative and can adapt your plans accordingly.

2. Keep records

It’s important to create an efficient reporting system for your businesses records – which supports compliance and your credit rating.

Tracking your business against your own historic performance and industry competitors will also help to give a wider understanding of your projected cash flow.

Below is an example of the types of documents and data you should log and review regularly:

  • Income

  • Uncollected cash

  • Monies owed

  • Regular expenses

  • Available cash

  • Inventory

  • Individual revenue streams – which are making a profit, which are struggling

  • Gross profit

  • Net profit

3. Review your spending regularly

Business expenses can soon build up, particularly as you grow and hire more staff. Keep in control of your finances and take regular audits to learn exactly how much you’re spending and how much income you need to cover the costs. Some key areas to focus on include:

  • Energy bills

  • Paper and printing

  • Travel

  • Technical systems and equipment

4. Credit control

This simply means putting processes in place to ensure that you’re paid on time and in full. A robust credit control system is vital to maintaining a healthy cash flow, speeding up the rate that any monies owed is received and reducing the risk of late payments.

A good credit control process is based around a number of factors, including:

  • Clients: It’s not uncommon to do your due diligence on potential new clients before welcoming them onto your books. Tools such as Experian Business Express can run fast credit checks on any company, identifying clients that are likely to pay on time, and those who pose a greater financial risk.

  • Clear payment terms: Just as you’re likely to have agreed on abiding by late payment fees for any invoices you receive, you can also clearly set out your expectations for your clients and suppliers. Make it clear how much you expect to be paid, by when and what the consequences are if the funds aren’t transferred on time, or at all. Where possible, create payment plans for large purchases with regular, smaller instalments. As well as making these larger investments seem more viable for clients, formal payment plans help you to forecast your finances, rather than receiving sporadic lump sums. Always send your invoices on time and use online systems or other simple methods to make payment convenient, rather than a task people avoid.

5. Staff training

Credit control systems are only effective when finance staff are fully trained on the importance of payments.

Beyond this level of direct financial training, keeping staff well-skilled in their area of expertise can also help to drive efficiency and lower costs for your business overall.

6. Diversify your revenue streams

Operating with a diverse product range can help to grow more revenue streams and reduce your financial risk. Businesses with just one revenue stream can quickly fail if their chosen industry or offering hits financial problems. Food, fashion and interior design, in particular, see short-lived trends – the question is, how can you make the most of them without falling behind as they change?

7. Make use of technology

Whether you’re a SME owner with no accounting experience or a finance specialist, there’s plenty of cash flow software available to make your processes more efficient. As well as offering improved accuracy, using app or internet-based tools makes it simple for you and your staff to log on and send invoices from any location. If you’re looking for help on choosing the right software for your business, read our guide which contains top tips on how to find the right business management tools.

8. Maintain good business relationships

Tensions can rise when dealing with business finances but maintaining good relationships can help build positive cash flow in the long run. Suppliers, lenders and clients are integral to a healthy cash flow, and by keeping on good terms it increases the likelihood of payments being made on time, or for flexible terms to be negotiated when needed.

9. Know the warning signs

As mentioned previously, you need to be able to spot early warning signs such as a recent drop in a customers’ credit score. Acting fast can reduce the chances of any repercussions, such as a lower credit score for your own business or damage to your reputation if you can’t meet your own payments.

10. Make use of the help available when you need it

Like a small crack on a piece of glass, if you notice a slight cash flow problem it’s crucial to address it as soon as it appears, rather than allowing it to become a make or break moment for your business. Work with your bank, accountant and financial advisor to get the support you need.

Understanding how to manage cash flow might seem difficult but with insights and informed forecasting, you can reduce your chances of storing up future problems.


This article - Why is cash flow management important? - Experian UK - originally appeared on Experian Business Latest Thinking Hub and has been published and adapted here with permission.

About Experian

Experian is the world’s leading global information services company. During life’s big moments – from buying a home or a car, to sending a child to college, to growing a business by connecting with new customers – they empower consumers and clients to manage their data with confidence. They help individuals to take financial control and access financial services, businesses to make smarter decisions and thrive, lenders to lend more responsibly, and organisations to prevent identity fraud and crime.

They have 21,700 people operating across 30 countries and every day they’re investing in new technologies, talented people, and innovation to help all their clients maximise every opportunity. They are listed on the London Stock Exchange (EXPN) and are a constituent of the FTSE 100 Index.

Learn more at experianplc.com or visit their thinking hub and their global news blog for the latest news and insights from Experian.


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