Growing a successful business requires sound financial controls – and controls around cash flow are particularly important. Following on from their first blog, Moore Stephens take us through all you need to know on the topic of cash flow.

Controlling cash flow is essential for any business. Your profits have little meaning unless you turn them into cash to keep your business thriving. While there’s plenty of information floating around on this particular topic, here are the top five tips to help your tech start-up build a healthy future.


Reconcile your business bank balance at least monthly

This may sound obvious, but it’s important. Make sure that the cash balance in your accounts system is reconciled to the bank statement and that somebody checks the reconciliation.

This is the first control any business should put in place. Not only does it ensure you know how much cash you really have, it also protects your business against the simplest frauds that can occur. If somebody is taking money out of your company bank account, performing a bank reconciliation gives you a good chance of picking it up.

Bill your clients as early as possible – and follow up immediately

Don’t wait for month end to bill your clients. Issue your invoices as quickly as possible. Once you’ve issued your invoices, call your clients to confirm receipt and ask them when they expect to pay.

By being proactive in this way, you can remove some of the common excuses clients use to delay payment, such as ‘I don’t think we received the invoice, could you send it again?’ Such tactics can delay your cash coming through for several months, so don’t give your clients the chance to use them.

Chase up overdue payments

If clients don’t pay their invoices on time, you must chase them up. Establish a clear policy requiring this action, identifying who in the business is responsible for making those phone calls.

This might be members of your sales team or someone in accounts, depending on your business and how you manage your customer relationships. Whoever it is, their responsibility should be made clear. Enforcing the policy is also vital – convey your expectations clearly.

Consider early settlement or direct debit incentives

You might wish to incentivise customers to pay their bills on time or early through discounts for prompt payment. If you issue regular monthly invoices to the same clients, encourage them to set up direct debits.

Any discounts you might offer can be factored into the pricing decision, while the certainty of incoming cash flow should not be undervalued.

Establish a policy and systems for approving purchases

Monitoring expenses is a good detective control to help you spot if you are overspending, but you can also try to prevent the problem by establishing a hierarchy of purchase approvals.

Your policy should make clear that no purchases should be made without proper approval. Identify certain individuals in the business who can approve expenditure up to a predetermined price point. Expenditure above that level should have to be approved by a director. In this way you can prevent your business from incurring unnecessary cost.

Although these controls are simple, they are also powerful. Businesses that implement and maintain them are well on the way to ensuring they have the cash they need to keep on developing and expanding.

cash flow

To find out more about the issues discussed in this blog, you can get in touch with Ross Northall, who will be able to answer all your burning questions.

Tech start-up looking to grow?

Click here to find out more about Hatched, Moore Stephens’ two year programme designed to support tech start-ups throughout the rapid growth phase.

Applications to join Hatched are now open. To register your interest click here.

This blog post was sponsored by Moore Stephens.



Tech events: Monthly Gamedev Meetup is on Jul 18, 2019 07:30PM find out more here

Stay up to date with what’s happening in Greater Birmingham’s tech ecosystem. Events, Jobs, Announcements and more.