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Cashflow problems and how to avoid them

No matter how effective your negotiations with customers and suppliers, poor business practices can put your cashflow at risk.

Look out for:

Poor credit controls - failure to run credit checks on your customers is risky, especially if your debt collection strategy is inefficient.

Failure to fulfil your order - if you don't deliver on time, or to specification, you won't get paid. Implement systems to measure production efficiency and the quantity and quality of stock you hold and produce.

Ineffective marketing - if your sales are stagnating or falling, revisit your marketing plan.

Inefficient ordering service - make it easy for your customers to do business with you. Where possible, accept orders over the telephone, email or internet. Ensure catalogues and order forms are clear and easy to use.

Poor management accounting - keep an eye on key accounting ratios that will alert you to an impending cashflow crisis or prevent you from taking orders you can't handle.

Inadequate supplier management - your suppliers may be overcharging, or taking too long to deliver. Create a supplier management system

Poor control of gross profits or overhead costs - assess where you can cut costs. Consider outsourcing non-core activities such as payroll services. Review your utilities contracts to see whether it is possible to reduce costs by switching tariff or supplier.

Using your cashflow forecast as a business tool


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  • Inward Investment Services
  • Town Hall & Civic Offices
    Westoe Road
    South Shields
    Tyne & Wear
    United Kingdom
    NE33 2RL

  • 0191 424 6262

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