Cash Flow Strategies: 8 Ways to Get Paid Faster

TLDR: Secure your cash, protect your margins.

Cash flow is the lifeblood of any business. Staying profitable isn't just about high sales; it's about ensuring that your income cash stays ahead of your outgoings. By incentivising early payments, negotiating supplier terms, and automating your debt collection, you can build a resilient financial buffer and focus on growth rather than survival.

The foundations of a cash flow strategy

We all know that cash is king. Maintaining a positive balance, where more money is coming in than going out, is a fundamental rule of business.

A cash flow forecast is your most important tool. It acts as an early-warning system, particularly for seasonal businesses where production costs may peak months before revenue arrives. By tracking your finances monthly, you can spot potential shortfalls before they become emergencies.

Managing this effectively doesn't have to be difficult. These eight cash flow strategies provide a solid framework for businesses stay financially healthy.

1. Incentivise faster payments

Don't let administrative friction delay your income.

• Direct Payment Links: Add "Pay Now" buttons to your digital invoices. Most

  accounting software packages offer this; the small transaction fee is a price well worth paying for immediate settlement.

• Clear Details: Ensure your BACS and payment details are prominent. It sounds obvious, but I have received many invoices without them, causing unnecessary delays.

• Advance Billing: Consider moving to a pre-payment or staged payment model (for longer projects). For services like training or coaching, paying before delivery is the industry standard. Adopt it to secure your cash upfront.

2. Negotiate better deals with your suppliers.

The aim is to ensure your customers pay you before you pay your suppliers. If that equation is flipped, you’re always going to have a problem with your cash flow.

• Leverage Your Position: If you are a significant client for your suppliers, negotiate longer payment terms.

• Build Relationships: Strong supplier relationships can lead to mutual referrals and better pricing.

• Review Contracts Annually: Treat your utilities, insurance, and service contracts like any other cost. Shop around yearly to keep your suppliers competitive and ensure you aren't overpaying for essentials.

3. Master the corporate invoicing process

Large organisations are notorious for rejecting invoices over minor admin errors or because the correct ‘t’ hasn’t been crossed or ‘i’ been dotted. You need to ensure, as far as possible, that the money will be paid on time. Don't give them an excuse to wriggle out of paying you without a fight.

When I co-owned a testing consultancy, one of the banks we worked with would change their process and not tell us, so they would suspend payments. It was only because we had a solid process in place that we would find out earlier. And in fact, we would often check before month end to make sure the process was still the same. To minimise the risk of late payment from corporates:

• Precision Matters: Understand their specific requirements - such as PO numbers or specific portals/submission processes before you hit send. Have an internal approval process before it's issued. Document this, so your team can follow it easily.

• Human Connection: Do get to know the people who pay the invoices – call and speak to them, rather than just email. If the person processing the payment knows you, they are more likely to prioritise your invoice or alert you if there is an issue.

4. Have processes in place for invoicing and debt collection

Consistency is the enemy of bad debt.

• Schedule Invoicing: Set a recurring "Invoicing Day" each month and stick to it religiously.

• Automation: Use your accounting package to send automated reminders. A tiered escalation process (e.g., reminders at 7, 14, and 30 days overdue) keeps the pressure on without manual effort. But you do need to be careful before you do this in case an invoice has been paid, but hasn't yet updated in your accounting package. You run the risk of upsetting your client if they've already paid...

• Manual Oversight:  Review your aged debt report monthly to ensure your automated systems are working and to identify any accounts that require a personal touch. Have a chasing process in place if you're not going the automated route.

 I know of one CEO who, when owed a large amount of money that he had been chasing for months, actually went to their offices and refused to leave until he was paid. It worked! I’m not advocating this as standard practice, but sometimes needs must.

5. Deal with habitual late payers

Are there certain customers who always pay late? How important are they to you?

Are you following the correct process? Repeated late payments are a drain on your resources. Do the following:

• Root Cause Analysis: Is the delay due to a change in their internal process? Checking in a few days before the due date can prevent "surprises."

• The Difficult Choice: If a client consistently ignores terms, ask why. If they are struggling, you can discuss options; if they are simply unreliable, you must decide if the relationship is worth the cost of chasing them.

6. Avoid "Profit Leakage" (Over-delivery)

Delighting customers is important, but unbilled hours directly erode your profit margins. Let’s look at an example:

An IT service support consultant is billed out at £75 per hour and is contracted to deliver on-site support to Company X for four hours a month.

Let’s say his all-in hourly cost is £25.

So – four hours at £75 per hour is £300 revenue

The cost to you is £100, generating a profit of £200.

If he does an extra hour, but the contract stipulates four hours only so you can't bill for it, then the cost goes up to £125, and profit is down to £175.

Here's how to avoid it:

• Scope Creep: If a contract specifies four hours of support and your team delivers five, your profitability drops instantly. Build in options to bill extra hours for essential out-of-scope work (and try to get it approved in advance).

• Time Tracking: Use tools like Clockify to monitor how much time is being spent on each client. If you choose to over-deliver, make sure it is a conscious business decision, not an accidental loss.

7. Build a financial reserve

Aim to keep three months of operating costs in a reserve account, eventually building towards six. This "peace of mind" fund smooths out fluctuations caused by unexpected late payments or the sudden loss of a contract.

8. Consider invoice factoring

If you are working with large corporates on 90-day terms while paying your own staff monthly, invoice factoring can bridge the gap. A provider (often a bank) pays the bulk of your invoice immediately for a small fee and collects from the customer later. While not suitable for everyone, it can be a vital tool for managing short-term shortfalls while you build your reserves.

Conclusion: Proactive cash flow management is key

Improving cash flow is about discipline and visibility. By implementing these small, consistent changes, from automating your reminders to tightening your delivery scope, you move from being reactive to being in control of your business's future.