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How to protect your SME’s cash flow

With over 99% of UK businesses classed as small and medium enterprises (SME), smaller businesses make up a huge chunk of the economy. SMEs are classified as businesses with fewer than 250 staff, so it is hugely important for them to be financially secure. Continue reading to discover how to protect your cash flow as a small or medium-sized business.

Importance of cash flow management

As a small business, being in control of cash flow - both in and out of the company - is integral to your survival, success, and eventual expansion. An SME must know what money needs to be spent and how much money you’re expecting to come into the business. This is vital for many reasons, including:

  • Controlling budgets
  • Making decisions on investment and growth
  • Reducing costs in certain areas

Bacs Approved Software will produce reports that allow a company to look ahead and see what income will look like over a month, quarter, a year, or any predefined period. You’ll also be able to monitor growth and trends in your payments from past to present, and produce a report on how far you’ve grown as a business.

Furthermore, using specific software like our Direct Debit Management Systems, you can track rejected payments and take action to remedy them. You’ll be able to see, clearly, who has sent a payment, who hasn’t, and you can configure the software to automatically collect any failed payments.. And, you can look at what the company has spent money on, and help you to assess the value of that spend.

If you carefully plan your outgoings and income, your small or medium business can prosper. This gives you greater control over how to invest your profits and can help you to grow at a sustainable rate.

Impact of not managing your SME cash flow

If you’re not managing your SME’s cash flow then there’s a good chance you could be wasting resources, and the company’s survival would be at risk. Something as simple as hiring too many people too quickly, or renting out an office space without a sustainable income can lead to failure.

Studies have shown that businesses fail because of poor organisation, planning and research into the market to ensure they have a viable product. Companies have also been known to head into a market where there is little to no room for them to prosper, leading to failure. Meanwhile, many great business ideas fail because of poor planning and running out of money.

If you manage to guide your start-up SME through the initial stages then managing cash flow becomes even more important. If you’re aiming for sustainable growth, or just healthy profit consistently, you must ensure that you’re not wasting money.

Steps to take to protect your cash flow

If you’re concerned about cash flow in your SME business, there are steps you can take to ensure the long-term health of the company. By following the below steps, you can guide your company to a profitable future, with the chance to expand.

Monitor what you spend and make sure it adds value to your business. If it’s not financially viable for the company, you must make the hard decision to try something else. Don’t be afraid to try something else. If something within the business isn’t working, be brave and take a risk. If investing, do it wisely. Whether that’s in resources or people. Start a cash reserve as soon as you can. As a business, it’s vital to have a pool of money to fall back on if hard times hit. You must be prepared for the unexpected, which could involve losing customers, unexpected bills, or general business cost increases. Nobody expected a worldwide pandemic to hit, and many businesses could not cope with the changes it brought to the economy.

Help for SMEs at Interbacs

At Interbacs, we can offer market-leading Direct Debit solutions. If you’re looking for financial guidance, or would like to pass over control of your Direct Debits, then consider Interbacs and the services we offer.

Interbacs can work with your IT or marketing team to integrate your choice of payment software and modules into your existing CRM or accounting packages using our powerful API. The result is more efficiency, better productivity and greater profitability.

If you’re in the process of scaling up your business, save yourself valuable time and money with reliable and professional payment solutions from Interbacs. For more information about any of our products or services, please contact us on 0161 667 0758, or email us at