Establishing a cash culture

Embedding a cash culture throughout your business will help you bolster your cash position.

A business with a cash culture is one whose entire team understands not only how their actions affect cashflow, but how they can improve it too.

Note: This page focuses on businesses with stock, but similar principles can be applied to those that provide services as opposed to goods and manufacturing.

Improving cashflow

For any small business, improving cashflow involves speeding up how you create, source, stock and sell a product, and how you collect payment from debtors.

Improving cashflow typically means:

  • negotiating credit from suppliers (to the fullest extent available without it damaging your relationship)
  • making sure customers pay on time

For many businesses, it also means manufacturing stock as quickly and efficiently as possible to support sales, while also limiting the number of write-offs or quality-control issues.

The management team must make sure that staff throughout the organisation understand that cash is key and look for areas of improvement. This means people in different departments will need to take different actions.

Improving cashflow isn't just the finance department's concern - it's everyone's responsibility.

Involving the wider team in managing cash

Just as you can give staff the power to improve how your business operates, you can motivate them to help improve cashflow too.

If cash is your main obstacle or challenge, giving your employees the authority to make changes to your business' ways of working or its processes could improve cashflow.

But be careful. It's crucial that staff don't prioritise cash in a way that harms other areas of the business - such as sales or the cost of materials - and profitability as a consequence.

Here are some ways in which you can involve your wider team in managing cashflow:

Managing stock and inventory

Any member of the team who's involved in managing stock and inventory should be in a position to look for improvements which could help release cash tied up in inventory. For example, an employee on the front line could spot unsold goods and stock well before senior management becomes aware.

Managing creditors and debtors

Finance and credit control will be keen to improve the amount of cash tied up in debtors (i.e. customers who are still to pay their invoices). However, the sales team can also help - for example, by raising invoices promptly and spotting early warning signs of customers having financial problems.

You can also give your procurement team the authority to negotiate better payment terms with your suppliers.

Strategic decision-making

Higher-level decisions can have a direct impact on your working capital. Choosing to delay major purchases, for example, could affect your business' performance or jeopardise its relationship with a key customer.

As a result, it's vital that you discuss all these kinds of decisions at board level, particularly during challenging times.

Financing change

Other decisions your business could consider are around ways to improve your working capital through financial facilities such as:

  • asset-based lending
  • supply chain finance
  • overdrafts
  • loans

Reviewing incentives

If you've created incentives for staff to improve the business' performance, you can put regular reviews in place to establish whether those incentives are having the effect you want.

Is the focus on continuous improvement? Have you set your cashflow performance targets at a level you can realistically achieve?

Top tips for managing debtors

Cash tied up in unpaid invoices can put your business' working capital under strain. This is why it's vital that you encourage your customers to make their payments as quickly as possible.

There are things you can do to speed up the time it takes for debtors to pay invoices. Here are some tips:

  • Issue invoices promptly, and follow up late payments immediately
  • Identify slow-paying customers and, if necessary, introduce cash on-delivery rather than cancelling business altogether
  • Offer discounts to customers for prompt payment
  • Ask for deposits when you take orders
  • Carry out credit checks on all new credit customers
  • Sell old, obsolete stock for the best price possible, as soon as you can

Sharing the cashflow burden: a checklist

Giving employees across the business the power to take responsibility for cash could take the pressure off your accounts team.

Use the checklist below and consider who in your business can help most with each of the relevant opportunities to release much-needed cash.


  • Are your major customers paying on time?
  • Is your product or service so critical to your customers that you can make paying your invoices a priority to them?
  • Are any customers having financial difficulties that might mean they're late paying you?
  • Do you manage credit according to best practice? Do you have a procedure for contacting customers for payment, both in advance of the payment date (for customers with a history of paying late) and immediately after a debt falls due (for customers who usually pay to terms)?

Stock and inventory

  • Are any stock levels of particular products rising because of slowing sales?
  • Do you have enough stock to meet customer demand? Are your stock levels too high?
  • Do you have too much working capital tied up in works-in-progress? Are the products you're manufacturing for orders you've received, or for speculative sales?


  • Are you taking full payment terms with suppliers, but making sure you pay on the due date?
  • Should you talk to specific suppliers about extending their credit terms?

Reference to any organisation, business and event on this page does not constitute an endorsement or recommendation from the British Business Bank or the UK Government. Whilst we make reasonable efforts to keep the information on this page up to date, we do not guarantee or warrant (implied or otherwise) that it is current, accurate or complete. The information is intended for general information purposes only and does not take into account your personal situation, nor does it constitute legal, financial, tax or other professional advice. You should always consider whether the information is applicable to your particular circumstances and, where appropriate, seek professional or specialist advice or support.

Making business finance work for you

Our Making business finance work for you guide is designed to help you make an informed choice about accessing the right type of finance for you and your business.

Read the guide to making business finance work for you

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