Subscribe to our newsletter to receive business tips, learn about new funding programmes, join upcoming events, take e-learning courses, and more.
Take the first step to successfully starting and growing your business.
Join for free)
Posted: Mon 13th Apr 2026
Last updated: Mon 13th Apr 2026
9 min read
Cash is the lifeblood of a company. By maintaining a healthy cash flow, you can make sure you have the money to pay staff wages, fund future projects and grow your business.
According to research by Novuna Business Cash Flow, 82% of SMEs have faced cash flow difficulties.
Small and medium-sized firms were the most likely to report difficulties (91% and 90% respectively), followed by micro businesses (84%). Even among sole traders, two-thirds (68%) had been affected.
If your business experiences cash flow concerns, here are five steps you can take to fix the problem.
To tackle the problem, you need to know what’s causing it. Establish key metrics, including:
your debtor days average
the number of overdue invoices in your sales ledger
your outgoing expenses
Once you have this data at your fingertips, you'll have a good idea of where the issues lie. Whether that’s credit control, overgenerous payment terms or a need for finance.
Business mentor Jon Davies from SecondBrain Consulting, advises:
"One of the easiest ways to improve your cash flow, especially if you work with large companies, is to have a structured process for onboarding new clients.
"A simple online form where you ask for key details you need to get paid. Things like:
Do they require a purchase order?
How often do they make a payment run?
Where should you send your invoices?
What's the email and phone number for enquiries?
"Having all the information you need means your invoices will be right the first time, sent to the right place and won't get held up for approval just because they're missing vital details."
When customers pay their invoices late, it can leave a gaping hole in your cash flow.
By improving your credit control, you can get your invoices paid faster and free up cash from your aged debt.
Enterprise Nation adviser Ben May explains the payment terms he sets with his clients:
"As a consultancy, I break work down into discrete stages of work, each with deliverables. I then bill half of each stage upfront, and no deliverables are presented until the upfront payment has been made.
"I don't start the next stage of work until the balance payment has been made on the previous stage. If the client wants to see progress on their project, they have to maintain the pace of payments.
"The only payment where there's no leverage is the balance payment on the final stage of work, and it's amazing how often this payment drags! But it represents a small part of the total billing.
"Obviously, this only works where the client is prepared to accept my terms and conditions.
"I've made it a personal policy never to work for any company that insists on their payment terms, and those terms exceed 30 days. My standard terms require payment within 14 days.
"Following this approach, I only occasionally find myself with cash flow issues, although my margins are pretty tight. And most clients don't mind these terms."
Start sending payment reminders to customers seven days before an invoice is due.
Send monthly statements to customers on longer payment terms.
Charge late fees on overdue invoices and continue to be proactive in chasing for payment.
Use a credit control tool like Satago to automate your payment reminders.
However, SME adviser David Ashdown points out a step that people often miss with cash flow issues, particularly when it comes to late payments.
"It rarely begins with the invoice itself. In practice, the warning signs are usually visible much earlier: expectations not clearly agreed, a client suddenly becoming less responsive, a relationship beginning to drift, or an awkward commercial conversation being avoided.
"By the time an invoice is overdue, the issue has often been building for some time.
"For SMEs, one of the most important disciplines is not only credit control and payment reminders but recognising those early signs and taking action immediately, while the relationship can still be repaired.
"That early recognition and intervention can often prevent matters escalating into aged debt, formal recovery or wider commercial disputes.
"I believe this is a valuable layer of support for small business owners and also for the associations and networks that support them."
There are several reasons why a customer might pay you late:
They’re disorganised and put off paying their invoices until the last minute.
They're using their suppliers as a free credit stream.
They’re facing financial issues or are on the brink of insolvency.
The first of these can be solved with good credit control processes; the second and third point to a wider issue.
You can avoid being stung by companies with unethical payment practices by running credit checks on your customers and establishing their DBT average.
A full credit report will also tell you if a customer is at risk of non-payment due to insolvency.
Once you have this information, you can decide whether or not to offer your customers credit.
Remember, it’s better to walk away from a job than to work for a customer who could put your business at risk of non-payment.
Some business owners see borrowing as a last resort.
But done the right way, acquiring finance can be an essential tool for improving cash flow and supporting your business’s growth.
If you have customers on 30+ day credit terms, invoice finance can be an effective way to unlock funds while you wait to be paid.
You can use the cash to pay bills and win future contracts, while avoiding expensive alternatives such as credit cards and overdrafts.
Example:
A digital agency wins a new contract and needs £20,000 to get the project off the ground.
They haven’t got the money in their bank account, but they are owed £30,000 from a previous job that is due to be paid in 30 days.
They decide to use invoice finance to free up cash from this unpaid invoice and use it to fund their next project.
If you're struggling to balance the books, your accountant is best placed to offer you expert, impartial advice.
Whether you’re planning a new project and want to know the best way to fund it, or you’re struggling with day-to-day cash flow concerns, your accountant can help you work out a plan that suits your business.
Krystle McGilvery, chartered accountant and behavioural change expert, has these tips:
Shorten the gap between doing the work and getting paid: The longer you wait to invoice, the longer you wait to get paid. Build the habit of invoicing immediately so cash flow isn’t quietly delayed.
Make payment easy: If someone has to think, click around, or chase details, you’ve lost time. Clear terms and frictionless payment options make it easier for people to pay you quickly.
Set expectations early: Be upfront about timelines, terms, and your working process so there’s no confusion.
Introduce default behaviours: Deposits upfront, automated reminders, and standard terms eliminate the need for you to remember or chase.
Offer small incentives for early payment: A tiny discount or perk can bring cash in sooner.
