Where has all the cash gone?

Ever look at your business bank account and wonder where all the cash has gone?


With the challenges we’re currently facing with the pandemic, it’s more crucial than ever to understand where your cash has gone, and make a plan to take control of it.

Most business owners have historically stripped all the cash out of their businesses, they’ve tended to live in the moment, but this isn’t good practice if you’re in survival mode.

We’re here to challenge you to become much more aware of the cashflow cycles in your business, and to do some things differently.


You may also be frustrated that your profits in your accounts don’t bear any resemblance to your bank balance. Check out our blog which covers this, and why the 2 don’t agree: where have my profits gone?

Firstly let’s look at the 5 principles to keeping the cash flowing through your business:

  1. Without cash your business will not survive.
  2. You need to understand your key cashflow drivers.
  3. Managing cashflow is all about your business processes.
  4. Treating the symptoms of poor cashflow without fixing the underlying causes is time consuming and frustrating.
  5. You need to be prepared to make changes.

Now let’s get stuck into the many ways you can improve your cashflow.

Even if you only choose 3 actions from the list below, you will start to see improvements:

1. Increase sales levels

  • increase customer retention rates
  • generate more leads
  • increase conversion rates
  • increase transaction frequency
  • increase transaction value

2. Improve your accounts receivable process

  • invoice faster! (use Xero to get invoices out in record time)
  • consider payments in advance of the work, or stage payments
  • make it super easy for customers to pay you (we love GoCardless and Stripe to automate your payments)
  • consider discounts for prompt payment
  • review your chasing process (Chaser is a fab credit control software that sends chasers with magic fairy dust!)

3. Monitor and forecast

  • create a financial plan and cashflow forecast
  • keep your accounting software up to date
  • import your financial plan and cashflow forecast into your accounting software
  • monitor and review regularly – how you’re doing against your plan

4. Review your debt / capital structure

  • review interest rates
  • check the term of the loan is right for you, can you extend it?
  • review how much you’re taking out of the business, is it affordable?
  • consider new investment
  • look at grants and tax reliefs

5. Improve accounts payable process

  • ensure you’re not paying late payment penalties or interest
  • take advantage of prompt payment discounts
  • review your supplier agreements
  • review your payments process
  • make sure you have a budget, and the right team members are given their budgets and targets (Soldo is a prepaid mastercard that’s perfect for managing staff expenses and budgets)

6. Boost your gross profit margins

  • reduce wastage and errors
  • negotiate with suppliers or seek alternative suppliers
  • don’t give your time and products away for free
  • carry out a review of systems and processes

7. Control your stock process

  • look at your stock ordering system to find areas for improvements
  • consider a review of your stock process and consider technology to make this more efficient
  • look at stock shrinkage and how this is being controlled
  • what’s your slow moving stock policy?

8. Reduce your overheads

  • review your overheads regularly, at least every 6 months (Dext is a fab software for recording and managing supplier invoices and payments)
  • go paperless and digital (we are big fans)
  • control staff expense claims and make sure they have budgets
  • review your organisational structure to find spare or wasted capacity

What’s next?

This all sounds great doesn’t it? But where to start? There are so many areas you could consider, but you’re not going to be able to do everything at once.

The key is to work out which areas of your business need the most improvement, when it comes to cash and profits, and then build an action plan to focus on your priorities.

We would love to work with you on our Action Plan, so do book in a call with us.