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  • Evolve Team

Strategies to help maximise cash flow in SMEs

Three people wearing hard hats and high-vis jackets infront of scores of different coloured shipping containers.

Cash flow is the lifeblood of any small or medium-sized enterprise (SME), especially for those operating within the crucial £90,000 to £1,000,000 turnover bracket. Efficient cash flow management can be the difference between thriving and merely surviving. Here are practical strategies to ensure your business maximises its cash flow.

Monitor cash flow regularly

The first step in maximising cash flow is to monitor it closely and regularly. Use accounting software like Xero to keep real-time track of cash coming in and going out. This visibility allows you to make informed decisions quickly.

Improve invoicing practices

Timely invoicing is critical. Consider sending invoices immediately after goods or services are delivered and follow up on overdue payments promptly. Offering multiple payment options can also speed up the process, making it easier for customers to pay you.

Manage stock efficiently to maximise cash flow in SMEs

Excess stock ties up cash that could be used elsewhere in the business. Implement inventory management practices that align stock levels with demand, avoiding overstocking while ensuring you can meet customer needs.

Negotiate better payment terms

Work with suppliers to negotiate payment terms that favour your cash flow. Extending payment deadlines can keep more cash in your business for longer, providing breathing room to manage other financial obligations.

Use cash flow forecasts

Forecasting future cash flow helps anticipate and plan for periods of tight liquidity. It allows you to take pre-emptive action, such as securing short-term financing or adjusting expenditures before cash flow problems arise.

Cut unnecessary costs

Review your expenses regularly to identify areas where you can cut back without impacting business operations. Even small savings can add up over time, improving your overall cash flow.

Seek professional advice

Sometimes, the best strategy involves seeking advice from financial experts. Professional accountants or financial advisors can offer insights and strategies tailored to your business's specific needs and challenges.

Maximising cash flow requires attention, discipline, and proactive management. By implementing these strategies, SMEs can improve their liquidity, ensuring they have the funds needed to grow, invest, and navigate the ups and downs of business life.

Did you know?

At Evolve Accounting, we specialise in helping SMEs maximise their cash flow through tailored advice and innovative accounting solutions. Our team is dedicated to your business's financial health, offering strategies and support to keep your cash flow strong. For expert assistance in maximising your cash flow, reach out to us today.


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