How to keep cash flowing in a banking crash

Mortgage Black Monday is what it’s been called. The day when one in ten mortgages were pulled.
And that’s been just one day in a shocking few weeks when banks …

1st October 2008 at 11:29 am

Mortgage Black Monday is what it’s been called. The day when one in ten mortgages were pulled.

And that’s been just one day in a shocking few weeks when banks have been collapsing or being swallowed up by new super-banks, while governments around the world are bailing out the financial sector … or not. It could hardly be called a good month for money!

With everyone clamping down at the moment and trying to keep on top of their cashflow, big businesses are not playing fair. Small businesses are being held to ransom as those higher up the food chain delay payments by as much as two months to maintain their own cash-flow.

With Boots leading the way earlier this year announcing it would now pay on 75 days and not the previous 30 days, it’s the small business that’s feeling it most.

So what can be done about it then?

Have you thought about tightening up your credit control? Do you have terms that you send out stating payment dates? Do you have procedures in place to make sure you keep on top of your debts?

Most people don’t enjoy chasing debts, but if you don’t, then it’s you and your business that suffers, so get a procedure in place.

Issue the invoice then make contact several days later to see if your customer has firstly received it, and secondly make sure it’s correct and they are aware of payment terms.

Then don’t fail to chase it two days after it’s due, if it’s not already been paid. You might find this approach uncomfortable, but if cash flow dries up it’s death for your business.

There is no need to be rude or aggressive. Polite and friendly will often get you further. Should a customer be having problems paying, work out a repayment schedule with them. Remember, something is better than nothing in this instance!

OK, so you have your credit control working for you, but still face the possibility of cashflow shortages. Well perhaps this is the time to go and talk to your friendly business banking manager.

Just think, if you are still solvent and moving forwards, you are more likely, even with the current climate, to get a positive response, even if it’s just arranging a small overdraft facility or loan. Don’t forget that even with controls tightening, banks still have products to sell and profits to make.

You don’t like surprises and neither do the banks (oh, how they must be suffering right now!), so a decent business bank manager is much more likely to be open to your requests before you find yourself in desperate financial straits.


Gill started out life working for blue chip companies, finished working in CEOs' offices then followed a seemingly natural path towards running her own business. One venture failed but like any good entrepreneur she's gone on to learn from her mistakes and made a success of two businesses since. Having been involved in business finance and the money game for a number of years now her most recent company New Branch provides advice on commercial finance and other business services.

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  1. Martyn says:


    First class advice – having a procedure and sticking to it is very important.

    If you call regularly, the customer will soon get to know that they can’t take liberties with you and will tend to pay you before the other guy – “the squeaky wheel gets the oil” syndrome. Also the call can then become a “customer service” call rather than debt chasing.

    I forecast my cash position (receipts and payments) daily on an 8 week rolling basis – gives me and my business partner a heads up on where things are going and any pinch points.


  2. Gill says:

    Martyn as you say, if you form relationships with them and keep them on their toes, they are certainly more likely to put you at the top of that vital pay NOW list.

    Too many small businesses don’t keep on top of their cashflow, usually because accounts scare them, and if this is so, get yourself a bookkeeper on board or take a course, money is the lifeline of your business!

  3. James says:

    Turning the screws on small businesses (like Boots have done) is totally counter productive. If their suppliers fail they will pretty quickly find life impossible too.

    Chasing payments should be as high a priority as making sales and a good credit controller is worth their weight in gold. Until the bill is paid the sale isn’t complete and lots of businesses have gone under with a full order book.

  4. Sam says:

    Cash flow is a massive issue for SMEs and one that this Government has failed to address with ineffective bank bailouts and VAT cuts.

    We are petitioning the Govt to increase Cash accounting eligibility to enable more SMEs to pay their VAT after they have received payment for an invoice instead of from the date the invoice is raised.

    We believe this could free up around £36billion in short-term liquidity this year alone. For more info see

    or sign the petition here

  5. Sam, excellent proposal. I’ve signed your petition and will encourage others to as well.

  6. HMRC’s “Business Payment Support Service” provides a useful way of spreading tax payments to the Revenue. More information on for those businesses genuinely struggling but still viable.

  7. Thanks Russell, useful, practical information. Like the look of your blog too.

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