I have gone through my cash flow and spotted a gap, what can I do?

Your accountant should be able to help you focus on what to do next and will be able to point you to help if needed. Here are a few tips on how to deal with cash flow shortages. 

Call your bank manager  

Developing a strong relationship with your bank manager is key for any business. Don’t be afraid to pick up the phone to your bank to discuss your existing facilities. Ensure you discuss your repayment plan and query whether there is any flexibility on covenants for these facilities. 

If you require extra funds, ask whether you can access additional borrowing. You should also consider alternative lenders who may be able to help you in the short term. 

Discuss options with creditors 

Whether you need to look at existing credit terms or plan for future needs, consider whether there is any flexibility with key creditors, including your suppliers and landlord, to amend payment and pricing terms. If cash flow is currently or going to be tight prioritise your payments but make sure that you have discussed this with your creditors first. To get them onside, engage proactively and treat them like the important stakeholders that they have been, are now, and will continue to be. 

Support from the Government  

You may be able to access support from national and local government for certain businesses and projects. Check with your local council’s business hub to see if there are grants and schemes that you can access. 

Consider staffing levels and practices  

Staff costs is usually the largest expense a business has. Think about how you use your staffing resources, bring in more efficient practices or utilise staff in a different way. You may consider adjusting your employees’ terms or ask staff to change their working practices. It is important to note any changes to an employee’s working arrangements is an employment law matter and appropriate advice should be sought. 

Keep communicating with clients  

We believe that staying close to your clients is critical. We would always recommend that you spend time contacting your key clients. Don’t just rely solely on an email to clients. A telephone call or visit can be an immensely powerful way of showing you that you value the relationship. Don’t be afraid to discuss payments terms. If you are about to take on a large contract paying up front or in instalments will help you to plan your cash flow better. 

Debtor collection will be crucial for your own cash flow. Ensure you have a rigid credit control system in place. Treat all clients alike and ensure that the system is adhered to. You have a right to be paid for the work you have done. The acceptance of credit or debit cards for any work carried out will greatly enhance your cash flow. 

We can help

If you need help planning your cash flow management we can help. To arrange a free initial consultation with a member of our team today call 01206 576800  or complete our simple online enquiry form.

Date published 3 Jul 2020 | Last updated 17 Apr 2024

This article is intended to inform rather than advise and is based on legislation and practice at the time. Taxpayer’s circumstances do vary and if you feel that the information provided is beneficial it is important that you contact us before implementation. If you take, or do not take action as a result of reading this article, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.