Your business is thriving. Orders are coming in, you're turning a profit, and growth is on the horizon. Yet, your bank balance tells a different story: cash is tight. Payments are delayed, VAT needs to be advanced, and investments feel daunting.
Sound familiar? It's time to scrutinise your cash flow. Profit isn't cash—and without cash, progress stalls.
What Exactly Is Cash Flow?
Cash flow represents the actual movement of money through your business: the funds entering and exiting your bank account. Unlike profit—which can include outstanding invoices—cash flow pertains to readily available funds.
A healthy cash flow ensures:
Timely payments to suppliers, staff, and tax authorities
Capacity to invest and handle unforeseen expenses
Peace of mind
Why SMEs Struggle with Cash Flow
Small and medium-sized enterprises often experience rapid growth, make significant investments, and operate with deferred payments. This combination makes them particularly susceptible to cash flow issues.
Common scenarios include:
Clients delaying payments while expenses continue unabated
Inventory sitting idle despite upfront payment
Rapid expansion with revenues lagging behind
Neglecting regular financial monitoring, leading to delayed responses
The outcome? A business that appears profitable on paper but struggles to meet its financial obligations, causing stress and hindering growth opportunities.
I want to have my cash flow analysed.How to Gain Control Over Your Cash Flow
Fortunately, there are proactive steps you can take:
Implement Cash Flow Planning
Track monthly inflows and outflows to anticipate potential shortfalls. A straightforward overview is often sufficient.
Invoice Promptly
Send invoices immediately after delivery or project completion. For larger projects, consider requesting deposits or interim payments.
Manage Payment Terms Strategically
Avoid extended payment periods like 60 or 90 days. Renegotiate terms where necessary and establish clear agreements.
Actively follow up on outstanding invoices using automated reminders and direct communication. Timely and decisive follow-up can make a significant difference.
On the supplier side, cultivate strong relationships and negotiate longer payment terms or reduced upfront payments when possible, retaining more cash within your business.
Maintain Inventory Control
Idle stock ties up capital.
Analyse inventory turnover to determine how long products remain unsold. Slow-moving items may warrant more selective purchasing.
Identify outdated or hard-to-sell goods and consider discounts or promotions to convert them back into cash.
Collaborate with Financial Experts
Engage with a PIA accountant or advisory specialist to identify bottlenecks and develop solutions, such as enhanced reporting, financing options, or smarter contracts.
I want to speak to an expert.Cash Flow: The Key to Stability and Growth
Cash flow is not a minor detail; it's the foundation for confident decision-making, team investment, client acquisition, and managing unexpected costs without undue stress.
At PIA Group, we assist SMEs daily in translating financial data into clear insights and actionable strategies, combining personalised service, digital tools, and the expertise of dedicated accountants.
Seeking Better Cash Flow Management?
Schedule a consultation with a PIA accountant or advisory expert. Together, we'll assess your current position and chart a path forward.
I would like to schedule a conversation.
