Battling cash flow issues

Cash flow is crucial. It is the lifeblood of any company and directly affects the scale of operations that the business can manage at any point. There can be several causes of your income stalling beyond bad planning and it’s not always something you can control.

Writing from an insurance company’s point of view, we’re all for forward planning and mitigating risk, but there are some things you just can’t insure. That isn’t to say that there aren’t some steps that you can take however, even if it’s just making yourself aware of potential problems.

Late payments

Invoices not being paid are the bane of small businesses and freelancers alike. There is nothing more frustrating than chasing after payments that should have long ago appeared and simply haven’t.

Somehow, whoever is chasing up an unpaid invoice can bizarrely end up being made to feel like they’re being rude in asking for money and I would not be surprised if several businesses end up writing off some invoices as money they will never see due to the hassle they have faced.

How to deal with this: Don’t be made to feel bad and keep pestering. If you can, get your clients to agree to pay you within 30 days and as soon as anyone is late in paying you, get on the phone and keep at them until they start redirecting your calls to avoid you and eventually give in and pay you. If they still don’t pay you, don’t let them get away with it and consider taking them to a small claims court.

Clients going out of business

Between you billing a client for some work that you have done and the client paying you for said work, a lot can happen. If your client ends up going bankrupt or ceasing trading for any reason, this can leave you in the lurch.

There might be some warning signs that this is about to happen to a client, but it can equally catch you off guard. Businesses can often surprise you by not being as healthy as they might otherwise appear to be.

How to deal with this: Depending on how your client went out of business, you might be covered by business interruption cover which you can have as and add on to your public liability insurance. This cover will often protect you against third parties suffering the same perils including fire and floods that you are covered for if this affects your cash flow and trading situations. If however they have gone out of business due to mismanagement or simply hostile trading conditions, you will be at the mercy of the administrators and competing with everyone else that they owe money to.


Sometimes you can be too successful for your own good. Tied in to both delays in payments and supply chain issues, the gap between having to buy stock and getting paid for products and services can be significant enough that it can drop you into the red in the middle of all that, leading to serious business continuity problems.

How to deal with this: The easy answer is to not bite off more than you can chew. Properly planning your business with both optimistic and pessimistic scenarios can help you spot issues like this a long time before they become a problem. Taking a “we’ll muddle through” attitude can be dangerous as operating in ideal circumstances is already a risk without something unexpected further interrupting your world flow.

Getting more money coming in than is going out sounds like a simple premise to anyone that hasn’t tried balancing the books of a small business and putting up with the borderline incompetence of some of your clients and suppliers can add up to significant troubles. Adequately keep on top of things and be on your toes when it comes to cash flow issues however and you’ll find that you can happily weather many storms.

This helpful guest post was sponsored by YOUR Insurance, a broker specialising in business insurance for small and medium sized enterprises.

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