Cash flow problems are the number one reason small businesses fail - not lack of profit, but lack of cash at the right time. You can be profitable on paper and still run out of money to pay your staff.
At Jenkins & Co., we help businesses across Gloucestershire get on top of their cash flow. Here are the practical steps that make the biggest difference.
Invoice promptly and chase firmly
The faster you invoice, the faster you get paid. Send invoices the same day work is completed or goods are delivered. Set clear payment terms - 14 days is reasonable for most B2B work.
Then chase. Politely but persistently. Most late payments aren't malicious - people are just busy. A friendly reminder on day 15 often does the trick.
Use direct debit where possible
For regular clients or subscription services, set up direct debits using GoCardless or similar. This removes the payment decision from your client entirely and dramatically improves your cash predictability.
Negotiate better terms with suppliers
If you're paying suppliers on 14-day terms but getting paid by clients on 30-day terms, you have a structural cash flow gap. Try to negotiate longer payment terms with suppliers, or shorter terms with clients.
Build a cash reserve
Aim to keep at least one month's operating costs in a separate savings account. This buffer means a slow month or a late payment doesn't become a crisis.
Monitor weekly, not monthly
By the time you see a problem in your monthly accounts, it may already be too late to act. Review your cash position weekly - it only takes 10 minutes with Xero.
Need help getting your cash flow under control? Jenkins & Co. offers bookkeeping and management accounts services across Cheltenham, Gloucester, Stroud, and the wider Gloucestershire area.