Cashflow, Growth, Profitability

19 questions to improve your cashflow

To help you identify the opportunities in your business, go through the following questions. Make notes on what is relevant to you. Estimate the benefit in money of taking action on each item that is relevant to you. Do it now!


1 Do you have an aged debtors report that you look at least weekly?

2 Do you have a clear policy on how to handle overdue payments, that identifies clearly who is responsible for collections, and that you implement consistently?

3 Do you have a target for DSO’s (days sales outstanding) with a plan on how to achieve it (or improve it)?

4 Working on the basis that we tend to get the behaviour that we tolerate (a bit like with pets, children or MPs really!), how does your behaviour towards your debtors reinforce their behaviour towards you?


5 Are you consistently able to pay your creditors on the terms agreed?

6 Have you renegotiated payment terms with all your suppliers within the last 12 months?


7 Do you know how much of your money is tied up in each line item of stock that you hold?

8 Do you have a plan to reduce your dependence on stock (ie generate more sales per £000 of stock that you hold)?


9 How is your pricing policy helping you to improve your gross margins?

10 When did you last change your prices?

11 When did you last renegotiate prices with your suppliers?

12 Where could you generate an extra 5%or more in gross margin – right now?


13 How often do you review every overhead cost with the aim of reducing by 10% or more?

14 What are your finance costs (loan interest, factoring costs etc) and is there a need to reduce them?


15 Are your sales growing faster than your overheads?

16 Of the products or services that you sell, do the ones with the highest growth rate have a higher or lower margin than the average for your business?

17 Is your marketing focussed on the products /services that will most effectively generate cash for you?

18 Is your marketing and sales effort focussed on the customers who will most effectively generate cash for you?


Have you got a few notes? Good – if not, go back and write them now.

Wondering why is sales at the bottom of the list? It’s only because the other things are pretty much under your control and you can take action on them quickly. We also want to be sure that extra sales will be profitable and will generate cash. Don’t ignore opportunities to make more sales fast from your existing customers though. Just ask them – after all what’s the worst that could happen?

The sharp-eyed will have noticed that I promised 19 questions and I’ve only given you 18. So here’s number 19;

19 What’s the first thing that you are going to do to improve your cashflow? Just pick one that you can get started on right now.

OK well done – but there’s a catch. There’s actually another question and if you read it I need you to make a decision and to stick to it. If you’re not prepared to make a decision that you will stick to, then don’t read the question. By now you’ve taken some sort of view on what the opportunities are for you to improve your cashflow, and hopefully you’ve even got an idea of how much money taking action would be worth to you. You’ve even decided what is the first step to get started. So here’s the last question.

20 When? Decide when. Right now, decide when you are going to take action on your first step. Put it in your diary and hold yourself accountable.


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