The Cash Flow Playbook: 10 Levers to Keep Money Flowing

You can have the best product or service in the world, but if you run out of cash, your business is dead. That's the harsh reality of business.

The good news? Cash flow isn't mysterious - it's mechanical. There are 10 levers you can pull to improve your cash position, and small improvements across multiple areas create exponential results.

A 10% improvement across just 3 levers = 33% cash flow improvement. Master all 10, and you're looking at transformational results.

Here are ten critical areas where you can take action to improve your cash flow. Each lever provides opportunities to increase incoming cash, reduce outgoing cash, or optimise the timing of cash flow.

1. Pricing Strategy

   The fastest way to improve cash flow. Every price increase drops straight to the bottom line.

   Consider These Strategies:

   • Consider testing modest price increases on new customers first
   • Explore bundling services to potentially increase perceived value
   • Consider implementing regular price reviews
2. Volume

   This could be more customers, existing customers buying more, new products or services, or increased customer retention.

   Consider These Strategies:

   • Explore ways to increase purchase frequency with existing customers
   • Consider opportunities to offer complementary products/services
   • Explore referral programs
3. Reduce Cost of Sales

   Reducing the direct costs tied to delivering your product or service increases your gross margin.

   Consider These Strategies:

   • Explore opportunities to negotiate better rates with suppliers
   • Consider volume discounts when cash flow permits bulk purchasing
   • Evaluate processes that might benefit from automation
4. Reduce Overheads

   Fixed costs that don’t directly scale with sales can often contain easy wins.

   Consider These Strategies:

   • Review all recurring subscriptions for potential optimization
   • Consider renegotiating contracts during renewal periods
   • Consider outsourcing vs. hiring decisions for non-core functions
5. Reduce Debtor Days

   This is how quickly customers pay you. Faster collection = better cash flow without increasing sales.

   Consider These Strategies:

   • Consider offering early payment incentives
   • Consider optimizing invoicing timing and processes
   • Explore systems for managing overdue accounts consistently
6. Reduce Inventory Days

   How long inventory sits before being sold.

   Consider These Strategies:

   • Explore demand-based ordering systems to optimize stock levels
   • Consider regular inventory reviews to identify optimization opportunities
   • Discuss consignment options with key suppliers where appropriate
7. Increase Creditor Days

   How long it takes to pay suppliers. Use with caution as it can impact relationships.

   Consider These Strategies:

   • Explore extended payment terms with key suppliers during negotiations
   • Consider optimizing payment timing within agreed terms
   • Maintain strong relationships through consistent, timely payments
8. Optimise Tax

   Tax reduction improves cash flow.

   Consider These Strategies:

   • Have tax reviews pre-year end with your advisors
   • Discuss timing strategies for major purchases with your accountant
   • Ensure all relevant allowable expenses are being claimed for
9. Owner Remuneration

   Though linked to tax, the timing and structure can make a significant impact on cash flow.

   Consider These Strategies:

   • Discuss optimal salary vs dividend structures with your tax advisor
   • Consider timing of discretionary payments (such as pension contributions) based on cash flow cycles
   • Explore performance-based remuneration structures with professional guidance
10. Strategic Borrowing

    Using debt wisely to fund growth or smooth cash flow cycles.

    Consider These Strategies:

    • Discuss establishing credit facilities during strong periods with your banker
    • Consider invoice factoring solutions for immediate cash needs
    • Ensure debt terms align with cash flow cycles (discuss with advisors)