Are You Managing Your Cash Flow Effectively?

Careful cash management is fundamental to every business. It is not uncommon that it can make the difference between success and failure. This is particularly true for SMEs and startups in the most competitive sectors, where effective financial management is crucial to keep businesses running.

Companies can extract maximum value by managing their working capital effectively. If your business is in a healthy cash flow position or has bridged cash flow shortfalls with invoice finance, here is how you can take advantage of the extra cash and make your working capital work harder for you:

1. Pay your suppliers on time

Paying your suppliers on time will eliminate a backlog of bills piling up. Tighten up your payment process including how you pay your suppliers’ invoices on time—not too early, not too late, but directly on time—to things like the invoicing process on the receivables side. Check that you are sending the invoice to the customer exactly when they should be getting it. This simple tool can release quite a lot of cash in the business.

2. Understand the cash impact on day-to-day operations

This consists of putting some basics in place such as having your operations team re-strategise their ordering process or re-negotiating your next customer contract to insist on advantageous customer-payment terms. Making the right day-to-day choices has a significant impact on how cash is spent to bring your company maximum value.

3. Asset-Based Lending

With asset-based lending tools such as invoice discounting, you can borrow against the value of your premises, plant, and equipment. This is a short-term method of financing, with competitive interest rates depending on your finance provider. Populous World provides businesses in the UK with the working capital they need to bridge the gap between creditors when they stumble upon cash flow shortfalls.

4. Manage your expenses

In most businesses, it can become common to ignore or overlook small expenses. This is extremely unwise, as they can mount up significantly and substantially affect the business’s working capital. Re-assess and analyse the monthly running costs of your business and see where you can cut back on expenses. Most businesses are paying for services that they don’t even use or no longer need such as insurance or subscriptions. In short, you can improve cash flow this way by cancelling services that you are not using.

5. Manage your inventory

Excessive inventories can tie up huge amounts of capital. Overbuying stock often results from poor communication between departments and can be modified by regular stock checks. Simultaneously you also need to avoid not having enough stock. It is vital to balance having too much and too little stock whilst paying attention to detail to your product line.

>> Is your business in need of fast, short-term financing? Do you need to access cash faster than your customers pay you?

Populous World is an Invoice Finance provider that unlocks working capital for UK businesses.

Bridging your business’s cash flow gap is something that Populous World excels in delivering, providing you with the funding tools to grow and sustain your business.

For more information, visit us or contact a member of our funding team: [email protected]

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