Cash flow Finance: Unlocking Solutions for UK SMEs

Cashflow Best Practice

The most important consideration is knowing your cash position and how much cash you produce and reporting as a key performance indicator for cash flow operations. Your Finance Controller or Finance Director should be on top of this and have access to your business bank account information on a daily basis and understand the flow of funds and the current account balances.

To assist cash coming in, make sure you invoice promptly, keep on top of your accounts and receive payments in line with your credit terms. Monitor payments and, where a payment is not made according to agreed terms, take action.

If your business operates through slow, complicated processes, you will be burning unnecessary cash. So, try to keep costs in check and identify areas you may need to improve.

Selling your product/service at a price that covers (all) relevant costs to provide you with the target profit margin is your aim. Know your costs, set & monitor gross profit and operating profit targets.

Also aim to build a surplus. It’s a great business habit to keep cash available for times when things do not go according to plan. No matter how carefully you plan, budget, forecast and improve something can emerge unexpectedly.

Take a read of our Top tips to optimise business cash flow for SMEs to get more advice on the key steps to keeping on top of your cash position.

How a cash flow loan can help

Many SME businesses find it prudent to relieve the strain on their business by taking out a cashflow loan to support your immediate financial needs and support long-term growth initiatives.

Cash flow Finance enables a business to hold an emergency surplus for any unexpected emergencies or crises that can arise at any time and ensure enough cash in the business to serve vendors and pay all business costs without having to live hand to mouth with invoicing, and have capital available to invest in growth opportunities when they appear.

Firstly, a business can use the loan to bridge temporary gaps between receivables and payables, ensuring timely payment of bills, salaries, and other operational expenses. By smoothing out cash flow fluctuations, the business maintains stability and avoids costly disruptions in operations. Working Capital Management is essential in managing day-to-day expenses and maintaining a healthy cash flow, especially during periods of low revenue or unexpected expenses.

Secondly, the loan can be invested in inventory management, allowing the business to purchase stock in bulk or take advantage of supplier discounts. This optimises inventory levels, reduces carrying costs, and enhances the efficiency of supply chain operations.

Additionally, the business can negotiate favorable payment terms with suppliers, further extending the benefits of improved cash flow management.

Furthermore, a cash flow loan can facilitate strategic investments in revenue-generating activities. Opportunity seizing with a cash flow loan allows you to take advantage of opportunities such as bulk purchasing of inventory at discounted rates, launching marketing campaigns, or investing in new equipment or technology to enhance productivity.

By allocating funds to initiatives that drive sales and profitability, the business generates returns that exceed the cost of borrowing, ultimately enhancing cash flow in the long run.

As part of this loan, Growth Capital can be used to upgrade infrastructure, equipment, or technology, leading to operational efficiencies, cost savings, and increased productivity. Whether it's implementing automated systems, upgrading machinery, or adopting new software, these investments position the business for sustainable growth and improved cash flow performance.

In summary, by leveraging the flexibility and liquidity provided by the loan, businesses can navigate cash flow challenges effectively and capitalise on opportunities for long-term success.

Take a look at our Guide to Unlocking Financial Opportunities: The Power of Cash Flow Lending: Harnessing Business Growth with Tailored Cash Flow Loans.

How we provide cash flow funding

At SME Capital, we know all businesses are not the same. So we provide bespoke, long term growth capital funding solutions to UK businesses not one-size-fits all blanket loans. We exist because we truly believe we provide a better alternative with our custom-made funding solutions for UK businesses to help you grow and succeed.

It’s in our DNA.

We are experts in SME lending, so whatever the loan purpose, our goal is to become your long term funding partner, which is why each bespoke loan will be specially-designed for you. We provide the best cash flow lending funding solutions for you, without you giving away control or equity.

We understand the importance of trusted relationships and have dedicated regional directors based across the UK who will take the time to understand your business, your unique needs specific to you and support you with your business loan application.

We enhance our traditional underwriting with data analytics, including timely risk and trend analysis to put you in control of your future.

By breaking down silos typically found in traditional lending organisations, we give you direct access to decision makers, enabling funding in 6–8 weeks.

Get in touch now to discuss funding options.

About SME Capital

SME Capital was founded to support the growing number of SMEs who face difficulty or frustration in accessing capital through traditional methods. We understand the importance of real and trusted relationships in the SME lending market and have dedicated Regional Directors based across the UK.

By combining traditional lending expertise with the latest in data analytics, we are supporting established UK SMEs with their long-term objectives and business ambitions.

View our portfolio

Case Studies: Growth funding for facilities management expansion