4R Blog

RSS Feed

How can SMEs improve cashflow management?

Date Added: 28/11/2013  

Managing cashflow is one of the major challenges that face small to medium-sized enterprises (SMEs) in the UK.

Issues such as late payments can prove to be highly problematic for small firms that only have a relatively low amount of money coming in and going out each month.

But there are ways SME owners can manage their cashflow better and ensure they have some protection against late payments and the damage they can cause.

Revenue management tools are one of the ways firms are looking to boost their cashflow. These are being embraced by hotels in particular, as they can ensure that rooms are priced at the right rate at the right time, explains Joseph Martino, senior vice-president at IDeaS.

Writing for 4hoteliers.com, he stated that increasing revenue is one of the key ways business owners can improve their cashflow situation - although this will only help if companies can ensure they are paid on time.

Late payments remains one of the most damaging issues for SME owners in the UK. Although the government says organisations can "claim interest and debt recovery costs if another business is late paying for goods or a service", this is not a road many firms go down.

Small company Fuze Ceremonies told the Guardian that it runs all its cashflow on a spreadsheet, thus limiting the need to purchase expensive software.

"We're keeping it simple and accessible. The three people involved in running the company look at cashflow at least once a week, usually more often," the company's founding director Anne Widdop said.

She pointed out all spending, regardless of the amount, has to be justified in terms of increased sales - which is a lesson all SME owners can learn from.

All companies have to find their own way to manage cashflow to the best of their abilities, but it is a good move to keep as close an eye on the finances as possible to ensure nothing slips through the cracks.

Chasing late payments is also vital, with firms able to request part of the payment upfront in order to ensure their cashflow runs more smoothly.

Get the Help You Deserve

0800 90 20 123

Urgent Help Call 24/7

020 7183 2606

We'll Call You

Request a Callback