Before you dig in, check up on 10 Ways To Improve Your Cash Flow and Another 10 Ways To Improve Your Cash Flow.

OK, let’s go.

21. Cut overheads – Recheck all overhead costs with a fine tooth comb. There is always something that can be stripped out of costs.

22. Combat seasonality by diversifying – Diageo, owners of the great British summer drink Pimm’s, launched Winter Pimm’s to address seasonality. Breweries produce lagers and light ales for the summer, stouts and porters for the winter. Walls ice creams were joined by Walls sausages. Greetings card makers celebrate all year round. Christmas Day, Birthdays, Mother’s day, Father’s Day, Auntie Edna’s Day.  Small business can always develop off season related products to smooth out the revenue curve, improve cash flow and keep the business clockwork well oiled all year round.

23. Renegotiate rent – Helpful if you have a healthy working relationship with your landlord. Even more helpful if you are coming toward the end of a lease period and haven’t yet renewed.  Test to see how much slack there may be in your rental agreement.  Nothing ventured, nothing gained.

24. Downsize property – Often not feasible for small business but nonetheless should be considered.

25. Re-evaluate insurance policies – Insurance policies can be a drain on a small business startup and difficult to know how far to take. I remember when my kids wanted their first (and last) rabbit.   I asked the pet shop owner how big the rabbit hutch should be. He replied, loud enough for the kids to hear, “As big as you can afford sir”.  Emotional blackmail I pondered as I ordered the Pantechnicon to deliver the rabbit’s three storey end terrace to our place.

Insurance works the same. Employee liability is easy – that’s statutory. But loss of profit, loss in transit, keyman insurance….where do you stop? Voodoo’s Second Law of Small Business states that whichever insurance option you decline, that will be the one that you should have kept.  To improve cash flow in hard times you need to make hard decisions.

26. Convert annual overhead expenses to monthly direct debit – Typical examples; insurance, vehicle hire purchase payments, membership subscriptions, photocopier rentals and so on.

27. Cut staff overtime – Overtime can easily become a habit, especially for employees. Now might be a good time to break that habit.  You can further improve cash flow by considering some sort of flexitime where even normal working hours can be accrued for busier times.

28. Avoid overtrading – Slow down on chasing the volume and gently contract your business around your top customers.

29. Hold cost cutting brainstorm with staff – Your staff are a great source of ideas and knowledge. Such a conversation also serves to put everyone in a cost conscious frame of mind.

30. Update your cashflow forecast – As always, robust planning can help avoid costly bank charges and interest payments.

Bonus Cash Flow Tip: In response to Gordon Brown’s credit crunch announcement last week, HMRC have just posted about a new Business Payment Support Service which seems to offer some real cash flow support for small business struggling to pay tax, national insurance or VAT. It’s not often HMRC will be so proactive in helping you improve cash flow for your business….so fill your boots.

I’ll tell you what, I’m now really in the zone and can’t stop so here’s a few more cash flow tips;

32. Reign in control procedures – i.e. staff fraud, sloppy payment procedures, daily banking etc – Often overlooked but should be monitored, cash flow crisis or not.

33. Consider paying PAYE/NI using BACS (Bank Automated Clearing System) – This gains you an extra three days credit. Use the same  BACS system to receive customer payments promptly.

34. Open interest bearing account – Small business can easily improve cash flow by transferring cash out of non-interest bearing current accounts. Millions of pounds of small businesses’ cash is left in accounts with no interest month after month.  Make sure yours isn’t one of them.

35. Speak to HMRC about changing VAT quarter – This is real crisis management stuff and at best will only work once.  You’ll need a good reason other than you’re short of cash.

36. Switch to paying VAT online – HMRC wil give you up to 10 extra days credit.

Phew. The point here is that if you dig deep, you can keep finding new ways to improve cash flow. Rather than wait until the crisis hits, make this a part of your standard small business routine and put yourself in a great position to manage the downturns.

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Before you digest the following cash flow suggestions, have a quick reminder of the first 10 cash flow recommendations.

OK, so here are the next 10 ways to improve your cash flow:

11. Trim inventory – Speak to your suppliers and ensure that you have the best ‘just-in-time’ service in place. Recheck inventory control systems to ensure you are holding the absolute bare minimum inventory. Reinforce with regular manual checks.

12. Trim stock holdings – Similar to inventory, recheck current sales levels against stock holding. Consider sidelining slow moving lines.

13. Renegotiate payment terms with suppliers – Unless you are negotiator of the year, there is always a little bit of slack to be reigned in with your suppliers, particularly if you have kept good personal relations with them.

14. Only pay bills when they are due – Often small businesses pay bills on a weekly or monthly basis to suit administration. However, even a saving of a few days can improve your cash flow significantly. So make sure payments are made at the final hour. Avoid the temptation of paying late though.

15. If you pay sales bonuses, only pay out when cash is in – Don’t forget a sale is only a sale when the money’s in the bank. So only pay commission at that point.

16. Pay by credit card – Depending on how desperate the need to improve your cash flow, you can absorb another few thousand pounds through use of credit cards.

17. Consider barter – Sounds a bit neanderthal but modern day barter – exchanging goods for goods and cutting out cash altogether -  is surprisingly mainstream and easy to setup with the aid of barter exchanges such as Bartercard.

18. Sell assets – The commercial equivalent of a garage sale. Consider selling vehicles, underutilised plant and equipment, property.

19. Letting out part of business premises – Not an option for many businesses due to limited space or restrictions on lease. However worth considering.

20. Leasing equipment rather than buying – Look to run a lease for approximately the lifetime of the equipment. Good option particularly with low interest rates.

You can improve your cash flow in many ways, some seemingly insignificant.  However the cumulative effect of these savings can make the difference so don’t rush to discard any options.

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I have listed 10 ways to improve your cash flow, all of which can be easily actioned.  Some will be obvious to you, some you may not have considered. It makes no difference as such information bears repeating.

1. Chase overdue invoices – Don’t drift, chase the day after they are due. Don’t be afraid to ask for payment, it’s your money after all. You’ve kept to your side of the agreement. It’s now their turn to stick to theirs.

2. Invoice accurately – Apparent errors on the invoice provides one of the most common excuses for paying bills late.  So take away the temptation and get your invoicing right first time.

3. Send out invoices promptly – It is important to send out the right signals to your customers.  If you’re sloppy with sending out invoices then you’ll be sloppy at chasing the money.

4. Early payment incentives – Consider offering cash on delivery discounts or prompt payment discounts.

5. Appoint dedicated credit controller – Chasing money is a full on task and needs the focus of a single specifically appointed individual.  Passing the task around leaves a chance for responsibility to slip through the net.

6. Use debt collectors – But only at the point when you feel that you’re being given the cold shoulder by your customer. If payment is over thirty days late, it’s unlikely to come at all without some form of positive intervention. If you have exhausted your main credit control procedure then the account in question should become an ex-customer.  Bring on the debt collectors.

7.  Factoring – One of the most dramatic ways to improve your cash flow is to ’sell’ your debtors list to a factoring company who will in turn pay you up to 85% of the total outstanding amount straight away.  They will, of course, charge interest until the debt is collected along with a commission for their trouble. Nonetheless this is still an option, particularly when in rapid growth.

8. Upsell to top 20% of customers – It costs little extra to sell your top 20% of customers additional goods or services. Sometimes you just forget to ask.

9. Increase prices – Contra to conventional wisdom, it is possible to raise your prices with little fallout.  It is worth setting the scene for this rise by reminding your customers of the real added value that your products bring them.

10. Change payment terms – Test the effect of this on new customers by reducing payment terms from say, 30 days to 15 days.  Yo may be pleasantly surprised by the lack of reaction.  Reducing your debtor days by just a few can improve your cash flow significantly.

Decide which methods can best improve your cash flow and dig in without delay.  Time is money after all.