3 ways to really take control of your cash flow

For all small businesses, cash in the bank (and most importantly easy access to it) is crucial, but in today’s economy it’s more essential than ever.

With rising costs at every turn, and access to finance still one of the biggest challenges business owners face, it’s all too easy to suddenly find your business in a cash flow crunch.

So how can you adequately prepare? Is it possible to forecast accurately in such an unstable economy? And are there still viable finance options that won’t cost the earth

In this article, we’ll explore three easy ways to keep control of the money flowing in and out of your business accounts. You can jump straight to the most relevant section or read on to find more info on how to really take control of your cash flow.

• Cash flow forecasting and modelling

• Explore cash flow finance

• Negotiate with suppliers

Forecast, forecast, forecast 

Most business owners are time poor, so while you may be aware that you should be monitoring your cash flow closely, the realities of running a business can make that difficult.

And without the right tools, it can be hard to have true visibility of what lays ahead. 

But while you may feel reluctant to invest time or money into cash flow modelling software, the truth is you could make significant savings in the long run. 

With accessible, automated data, or even a simple cash flow forecast template, you can get a proactive insight of what’s coming. Whether it’s to help you plan adequately for upcoming expenses (like seasonal stock purchases or tax bills) or to ensure you’re not stung by late payment fees, you need to give your business enough time to source suitable finance to cover any shortfalls if you need to.  

While forecasting accurately in today's unstable economy can be particularly challenging, it’s not impossible and scenario planning can help you prepare for multiple outcomes. 

As your business grows, you can leverage past performance data and it’s also important to look outside of your individual business at wider economic indicators and industry trends.

Cash flow finance - Get a cash injection into the business

Taking the time to properly forecast should give you a clear idea of upcoming cash flow shortfalls.

Ideally your main source of revenue will be sales, but cash flow finance can help you cover any gaps. 

There are a range of finance options to consider:

Revolving credit facility – A flexible option that lets you borrow money for your business, repay it, and borrow more again whenever you're in need. At Lenkie, we can help you pay expenses immediately with repayment plans spread across up to 12 months.

Invoice financing – Secure funding against your outstanding customer invoices. This is especially helpful for businesses with long payment terms and high operational expenses.

Merchant cash advance – Rather than using your invoices, merchant cash gives you an advance on your card sales – so it’s particularly suited to retail businesses.

Small business cash flow loan – If you need a fixed amount of capital for a short-term need, a loan will give you a lump sum with a typical repayment period of between six months and two years.

The right funding for you will depend on your our specific business need, industry and credit history – and it's not free money, so make sure you explore the best option for your circumstance.

And finance isn’t the only way to help improve your cash flow, cutting costs is another great way to help keep more cash in the business.

Negotiate with suppliers – and shop around

Most people are now wise to shopping around for their consumer bills, from renegotiating your Sky contract to your personal car insurance, chances are you wouldn’t let yourself get stung. But with your business, it can be a lot harder to switch or negotiate with suppliers.

It could be that you don’t want to take the operational risk of changing, which is understandable, cheapest isn’t always best if it means compromising on quality. Or you may have longstanding relationships that you don’t want to disrupt. 

Only you can make a judgement call on if the cost savings will be truly worth it in the long run, but what’s important is that you are periodically reviewing your contracts and remaining open to new options. 

Energy bills remain 70% above pre-crisis rates currently, and with no new government support, locking in a new fixed deal could be the only way to make your bills manageable. 

Additionally, talk to your current suppliers about reevaluating your payment terms, an extension could help you protect your working capital. Equally you need to minimise late customer payments as best you can – you could even try to incentivise them to pay early.

Next steps

By taking this proactive action, forecasting accurately, exploring your finance options and negotiating with suppliers (and customers!) to avoid high fees and late payments – you're giving your business the best chance of combating cash flow painpoints.

If you’re looking for a funding injection to boost your cash flow, we could help you access a credit facility of up to £1m in just 48 hours. 

Create a free account to get a pre-qualified limit in just 2 minutes with a few quick details.