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Working capital solutions – four steps to take control of your cashflow

Small and medium size businesses in the UK are struggling with poor cashflow. Whilst late payments are part of the problem, they are not solely to blame, and SMEs are increasingly finding themselves in the red for a number of reasons. Fortunately, there are a variety of working capital solutions available, as well as steps that you can take to overcome liquidity challenges. 

1. Simplify business operations

Small businesses can manage their cashflow better simply by keeping their house in order. Your company’s financials need to be reviewed regularly; think monthly not quarterly. It’s up to you to have an exact knowledge of the money coming in and going out of your business at all times. In other words, stay on top of the bills, pay people on time and invoice companies correctly. 
 
Unexpected bills are unfortunately, to be expected. Sometimes they’ll be manageable and other times, they can threaten the very survival of your business. You need to have capital set aside to cope with these situations and stay afloat. 
 
Better accounting practice won’t just improve your current financial state, but will also benefit you in the longer term should you require support. Funding providers won’t want to see a history of poor management. Why should they expect you to keep up with payments, if you haven’t managed to stay on top of your other bills? You never know what is around the corner, but you don’t want to be struggling to secure funding when you need it because of poor financial management. 

2. Prepare for late payments

In periods of economic uncertainty, cash most certainly is king, yet there is often less of it in circulation as people, banks and businesses tighten their belts. Just one late payment can have a knock-on effect down the supply chain and put real pressure on a small business’ ability to operate. The best way to help you prepare for this risk is to put money aside. Save consistently and build a reserve to cover any shortfalls should they occur. 

3. Be aware of available funding programmes and products

In addition to a good savings plan, there are lots of working capital solutions on the market. Short-terms loans can help you manage a temporary gap, long-term funding can be used to pursue future growth targets. The UK Government has many initiatives in place to help fund businesses with cashflow issues, encourage timely payments to SMEs and drive growth. Most small businesses however, don’t realise what is available to them and this lack of awareness can have serious repercussions. 
 
Make a point of investigating the most relevant funding options for your business, including altfi options like invoice finance and secured business loans. If you know what is available before you need it, you’ll save valuable time when you do. 

4. Use the best funding options available

Businesses with critical cashflow needs tend to focus on short-term financial assistance. This is not always the best solution; sometimes a long-term loan, or several types of alternative business funding, are better suited. Match your business requirements with the most relevant funding product or products for the best outcome. 
 
At Nucleus, we help businesses take control of their cashflow issues with bespoke working capital solutions. Our team of financial experts works hard to make sure companies we work with realise their growth potential. 
 
Get in touch and speak to one of our specialists about the best working capital solutions for your business. 

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