Guide

Grow your business successfully

Business growth: cashflow management

Good cashflow control is important for any business. For a growing business, it is absolutely crucial, since financial problems can limit or stop the growth of your business. Overtrading can similarly cause grave issues.

Making the best use of your finances should be a key part of business planning and assessing new opportunities. You may need to pass up certain opportunities if pursuing them would taking essential funding away from your core business. See how to avoid the problems of overtrading.

How to manage cashflow during business growth

You should carefully control every element of working capital to maximise your free cashflow. This included:

  • Effective credit management and tight control of overdue debts are essential. You may also want to consider raising finance against trade debts. See factoring and invoice discounting.
  • Efficient stock control and inventory management are important as your business grows. Holding obsolete stock may become a problem. You may want to manage your suppliers to reduce delivery cycles, or switch to suppliers and systems that can handle just-in-time delivery.
  • Planning ahead helps you to anticipate your financing needs and arrange suitable funding. For many growing businesses, a key decision is whether to bring in outside investors to provide the equity needed to underpin further expansion. See business financing options - an overview.

Find also other best practices for efficient cashflow management.