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What is cashflow and how can you manage it effectively?

Cashflow is the movement of money in and out of your business. In order to have positive cashflow, you need more money coming in to the business than there is going out. This ultimately means your business will be able to settle any bills and importantly, invest in growth.

Our Cashflow Clinic has been set up to help SME's with cashflow finance advice, tips and resources to help with their cash flow position. We explore ways you can begin improving your cash flow situation and start getting your business on track to positive cash flow.

A common reason businesses can suffer cashflow finance problems is having to wait 30 - 90 days to receive payment of invoices or experiencing late invoice payments, which can be a serious financial strain for a business. Invoice financing has become a popular solution for businesses due to its simplicity and providing funding to businesses quickly to improve their working capital.

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How can our Invoice Finance solutions help improve your cashflow finance position?
    • Boost your cashflow without having to wait up to 120 days for your customers to pay you
    • Our revolutionary digital onboarding gives you quicker access to funds and allows us to take on new business remotely during this lockdown period
    • Release up to 90% of the invoice straight away, and the final 10% when the invoice is settled
    • No need to chase your invoices, we can do it for you
    • 6 month trial period followed by a rolling contract

We have revolutionised cashflow finance with our digital onboarding process


We are an award winning cashflow finance company

Best Invoice Finance Service 2021

Highly Commended Factoring Provider 2021

Best Invoice Factoring Provider 2020


Read our latest client reviews

4.7/5

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What problems can negatively impact cashflow?

Cashflow is one of the biggest financial challenges that any small business will face. Without readily available cash, it can be really hard to push on and grow the enterprise, and in severe cases, it can even threaten the viability of the business. This happens when cash flow is so poor that there are few funds available for things like payroll, rent, and other essential monthly commitments. But what some of are the biggest problems with cash flow for small businesses? 

High overheads

It’s worse for some industries than others, but any business owner or accounts officer will know just how expensive it can be to keep a modern firm going. It’s these (often monthly) expenses that are what really eats into cash. Any business that’s finding that too much cash is leaving the accounts every month might look to making some cuts, or looking for alternative and cheaper suppliers. Never do anything that might impact profit however, as this could ultimately make matters worse.

Late invoices

Unpaid invoices are perhaps the biggest contributor to problems with cash flow, and they can affect businesses of any size. At any time here in the UK, hundreds of millions of pounds are outstanding, and this can be really harmful. Fortunately, if your biggest issue is late invoices, there are plenty of ways you can improve the situation. Tightening up on credit control, effectively tracking and chasing invoices, and being careful with terms can all help to get those invoices paid when they’re due. There are also financial products on the market, such as invoice finance, which can help remove some of the worry over late payments.

Low profit margins

A lack of profit will naturally mean less cash coming into the business. Start-ups can often face challenges in this regard, because their unestablished reputation can make it harder to secure lower rates for goods and services that they might then sell on. This is why it’s so important for new market entrants to be able to offer something different to competitors. If you can ensure your product stands out - whatever it may be - then you stand a better chance of being able to apply a strong profit margin that doesn’t have to directly compete with other businesses.

Lack of planning

Finally, a lack of planning can actually be much worse than you might expect. The dates that money comes in and goes out can have a surprisingly large effect on cash flow, and poor planning in this regard might mean dipping into an expensive overdraft unnecessarily. As best you can, forecast for when you expect money to arrive and leave the accounts. This will leave you better prepared, less likely to experience short-term issues, and less likely to need help with your cash flow.


How can you solve cash flow problems?

Cashflow is widely understood to be the lifeblood for businesses both small and large. Without it, it can be difficult to meet those monthly commitments, such as rent, wages and product costs. Unfortunately, it’s very common for SMEs to have cash flow problems, arising for all manner of reasons. Fortunately, there are a few different ways to improve cash flow:

Maximise your bottom line

It seems obvious, but one of the key ways you can resolve cash flow problems is to improve the difference between your income and outgoings. Generating new revenue is clearly the trickier element to this, so you should look to free up cash each and every month as a first port of call. Many businesses are surprised by the amount they can save through a diligent fact finder that looks at where costs could be saved.

This isn’t about having a knee-jerk reaction and making sweeping changes to the business - it’s about looking at how small savings can quickly add up. Contracts for things like energy and insurance are two places in which another look at the market could end up saving you a considerable amount of cash. Go to the different parts of the business, and see where people have ideas to reduce costs without fundamental changes to the way things work.

Better invoice management

Late invoices are one of the biggest contributors to cash flow problems. Often, a business is successful, and balancing income and outgoings isn’t too much of a problem. However, if customers aren’t paying their invoices when they should, it can make bringing cash into the business really difficult. There are a few ways you can improve this, at various stages in the process. The first thing to bear in mind is that you need to make invoice terms as clear as possible, which will reduce the likelihood of customers pushing things to the limit. You’ll also need to take a proactive approach to chasing invoices when they fall late - never allow a late payment to be your own fault for not chasing enough.

Financial products

There are a variety of financial products available on the market that can help you get round cash flow issues. Overdrafts can be useful if you find that you rarely have cash flow issues, perhaps at certain points of the year. You can use the cash when you need it, and then repay when things even out, without having to have an ongoing commitment or negotiate every time you need finance. Invoice Finance is another option that seeks to resolve the issue of cash flow, particularly when it comes to late payments of invoices. In short, it means that you don’t have to wait for a customer to pay to receive money into your account.​​​


Smarter, Faster and Simpler Cashflow Finance with Hitachi Capital

Smarter, Faster and Simpler Cashflow Finance with Hitachi Capital

Smarter, Faster and Simpler Cashflow Finance with Hitachi Capital

Find out how we are revolutionising the way UK SME's access cashflow finance.


Are slow invoice payments causing you cash flow problems? 

Release up to 90% of the invoice straight away with our Invoice Finance solutions

Get a quote

Contact our friendly UK advisors on freephone

0808 250 0859

08.45 - 17.15 Monday to Friday


Please note that costs are an estimate only and are based on the entered values. Your final quote may change once a Business Development Manager has assessed your business in more detail.

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More cash flow advice from our blog

How to recruit when working remotely

Apr 2021

Here are some simple steps to make your remote recruitment process run a little bit smoother.

Creating strong branding for a start up

Apr 2021

Here are some of our top tips for creating a strong brand for your business and bolstering its position within the marketplace.

Business Moneyfacts 2021 award winners

Apr 2021

Pleased to announce we are winners of Business Moneyfacts 2021's Best Service from an Invoice Finance provider!

Well done to the credit risk team

Apr 2021

Well done to the team for successfully completing their delivery of the first Risk Training Programme.


Watch our video guides to help you to make the best decision for your business

How do you select the right independent provider?

How do you select the right independent provider?

How do you select the right independent provider?

Great, you have decided to choose Invoice Finance for your business cashflow solution. You will have seen from your online research that there are many independent providers offering solutions. We have developed this quick video guide to outline what you need to look out for when selecting the right Invoice Finance provider for you and your business.


You need cash flow to fund your business growth, what are your options?

You need cash flow to fund business growth, what are your options?

As a business owner of an SME, you have probably researched the different finance options available to you and seen that the options are endless. We have created this quick video guide to highlight the most poplar funding methods and the advantages and down sides of each one. We hope this helps to give you a clearer understanding.

You need cash flow to fund your business growth, what are your options?


Why choose invoice finance instead of a bank overdraft?

Why choose invoice finance instead of a bank overdraft?

Why choose invoice finance instead of a bank overdraft?

Here we explain why invoice finance can be a great alternative to improving your cashflow position than simply applying for a bank overdaft.


You have chosen Invoice Finance, will you choose a Bank or an Independent?

Will you choose a bank or an independent?

There are many choices when selecting the right provider for your Invoice Finance and cash flow solution needs. We have put together this quick video to inform businesses of the different things to look out for, and what the benefits are for choosing an Independent over a traditional Bank.

You have chosen Invoice Finance, will you choose a Bank or an Independent?


Is it easy to switch from an existing provider?

Is it easy to switch from an existing provider?

Is it easy to switch from an existing provider?

We offer a seamless transfer from your existing provider. We'll contact your existing provider and organise the transfer of your invoices to our facility, and ensure that there is no disruption to your funding. That way, you can rest assured that you will always have the cashflow required to continue running your business.


Why choose Hitachi Capital for your cashflow finance solution?

Why choose Hitachi Capital for your cashflow finance solution?

Watch this quick 30 second video to see why you should  consider Hitachi Capital Invoice finance for your Cashflow Finance solution. We have invested in market leading technology to provide a digital application to our prospects. This allows clients to access their money quicker, faster and simpler. Watch the video to find out more.

Why choose Hitachi Capital for your cashflow finance solution?


Cash Flow FAQs

What are the 3 types of cash flows?

There are 3 types of cash flow and they come from:

  • Operating Activities – cash flow from day to day running of business
  • Investments – cash flow from future ventures
  • Financing – cash flow from bank loans, equity and dividends

What is a cash flow example?

Cash flow is calculated over a specific period of time, usually a standard reporting period, and is the difference between the cash received by a business from sales of its goods or services and the cash spent on its operations, financing and investments.

Does cash flow include salaries?

Cash paid out to employees as a salary appears in the operating cash flow section of a cash flow statement. It is part of the cash flow calculation.

What are the best cash flow businesses?

The best cash flow businesses are the ones where the day to day running costs are low and the market position is high. They will be receiving regular sums of cash into the business but will be paying out much less, this will generate a good cash flow.

Examples include freelancing, consultancy, online and service industries with minimal overheads.

How do you explain cash flow?

Cash flow is the net amount of cash that a company has at any time, it is difference between money coming into a business minus money spent to keep the business running. It can be either positive or negative.

How is cash flow calculated?

Cash flow is calculated by subtracting cash spent on operations, financing and investments from cash received from sales of goods or services, financing and investments.

Why is cash flow so important?

Cash flow is important because it determines whether your business has the cash available to remain solvent as well as its ability to meet any future requirements for capital and growth.

What is considered a good cash flow?

Cash flow is usually considered good when the ratio of incoming cash to outgoing cash is greater than 1 (Incoming cash/outgoing cash)

If the ratio is greater than 1 it indicates that there is more cash coming in to the business than going out so cash flow is positive and is available to meet short term financial obligations.


Find out more about our cashflow finance products

Invoice Finance

Invoice Finance

An invoice finance facility is a finance facility provided by an invoice finance provider to help business owners leverage their unpaid invoices in order to provide an instant cash injection into the business. Find out more about all of invoice finance products and how we can aid your business growth in the link below.

Invoice Discounting

Invoice Discounting

Invoice discounting is an invoice finance facility when a company's unpaid accounts receivable is used as collateral for a loan. Click below to see how we can support your business with our invoice discounting solutions.

Invoice Factoring

Invoice Factoring

Invoice factoring is where a business sells its invoice (accounts receivable) to a third-party factoring company (the factor). Click below to find out more about how our invoice factoring solutions can help your business with its cashflow.

Debt Factoring

Debt Factoring

Debt factoring is another term for invoice factoring and is a great way to improve your cashflow position. Click below to find out whether our debt factoring product can support you with your cashflow needs.


Get a quote

Contact our friendly UK advisors on freephone

0808 250 0859

08.45 - 17.15 Monday to Friday