How your SME can save money each month to deal with cash flow issues

Is your business having cash flow difficulties? Are you soon to be short of money? Here’s some money saving tips for you…

Cut back on labour accordingly

Throughout the year, it is unlikely that each worker is going to be needed every day. Every trading business has quiet periods and of course busier periods – it is part of the business cycle. Labour tends to have lots of capital tied up, so the best way to save money is to cut back on staff when you can.

Of course, this works best for zero hour contracted workers, as those on salary you can not do much about. For salaried workers you may have to just suffer the liability. But when staff are not needed, reduce their hours – you will see great benefit.

Additionally, you could outsource. This is a new phenomenon through globalisation which allows companies to send their production and other business activities to countries around the world, for a cheaper cost of labour. Consider this … it may work out beneficial for you in the long term.

Look into alternate suppliers

You may think you have got the best deal with your suppliers – but have you really? The economy changes frequently, as do prices, as suppliers compete. Therefore, keep a close eye, ensuring you are getting the cheapest deal you can. Perhaps you can look into bulk buying – stocking up for a lower cost?

You may have to change suppliers for a period of time, but if it helps your cash flow – surely it is worth it? But do not overlook the challenges that an alternate supplier can bring in terms of quality and brand perception – all must be aligned or else the decision could be inappropriate.

Cut back on marketing costs

Yes, advertising is the way to drive sales – but can you really afford it? To save money, alternative marketing methods can be used such as encouraging word of mouth advertisements and use of social media – perhaps even self-marketing the brand! Be creative, get thinking – there are plenty of cheap ways to market a company. Modern technology allows you to really check to see if advertising or online marketing is working.  Take a very critical eye to the spend and check it is worth it.

Sell any unused assets

Actively look for ways to get cash! Take a walk around your office, and seek the assets that are no longer in use, or needed. Most businesses you will find some old things chucked at the bottom of the filing cabinet or lying on the kitchen floor. It can even be unused office stationary – all you are trying to do is find things you can sell instantly to provide some cash to help your company get along. See what you can find.

Monitor your cash flow and use budgets

To ensure you can keep control over your finances, monitor them. Construct a cash flow forecast sheet (if you do not do this frequently already!) detailing the income and expenditure you take. From this, you can then identify any potential cuts or reductions you can make. Ideally, you look to increase sales but decrease payments.

Budgets can assist you with this – be sure to stay in target and plan in advance. If you know you will experience cash flow problems in summer months, then plan for those months to reduce the energy usage or switch providers, for that period, to save you the expense, for example.

Re-evaluate your credit terms

Do customers pay you first? Do you pay suppliers late? To ensure you are saving money, reduce the number of customers who have credit – as this leaves the risk of bad debt if not paid. Perhaps suppliers will accept being paid later, to give you time to raise the cash needed, in times when you cannot afford it or if there is urgent requirement for it better elsewhere – you must however act sensibly and not be mischievous! The supplier must still be paid – credit terms may just be able to be negotiated and more flexible.


Could you relocate to a cheaper premises? This approach may be taken, if large amounts of cash flow is needed. If you just need temporary cover, perhaps you could negotiate with your landlord who may reduce your rent for a certain period, to help you get by. You never know unless you try!

Don’t spend unnecessary costs

Do you really need to put your capital into buying a fancy new machine? Hiring new staff? Purchasing additional materials? Or can you save costs from using what you have? Before making a purchasing decision, consult other directors or management teams and hear their views – how necessary is it? Evaluate first.

It’s the little things!! Do you really need to keep that light switch on? Think about the bigger things – the little costs add up.

Apply for finance

After trying all of these methods, you may be left with no other choice but to take out a loan, or raise finance from investors, if you are unsuccessful in saving money and need access to capital fast. can assist you to connect with providers of finance, in your times of need. Be aware that this should be the final stage in assisting with capital needs. Try to follow the advice and keep control over your costs – always look to save where you can, to maximise your opportunities for expansion and investment later on.

Losing control of your capital is something you do not want to do. If you have to apply for finance to get by, this shows risk of insolvency and financial strains. Avoid where you can!

Rebecca Dunne, the author, is the freelance writer for KSA Group, who are Licensed Insolvency Practitioners in the UK, established in 2000.  KSA Group run which contains over 2000 pages of useful information for struggling businesses.