Seven ways to improve working capital without borrowing

Invoice on the day the work is done

Invoicing delay is pure, self-inflicted cost. If invoices go out a week late on average, you have voluntarily extended your own payment terms by a week across the entire ledger.

Automating invoice raising from job completion or delivery is often the single fastest cash improvement available.

Make collections a scheduled process

Chasing should not depend on someone remembering. Set a fixed cadence: a courtesy reminder before the due date, a follow-up on the due date, and escalation at agreed intervals afterwards.

Track debtor days by customer, not just in aggregate. The average hides the handful of accounts causing most of the problem.

• Automated reminders before and after the due date
• Named escalation owner and fixed escalation dates
• Credit limits reviewed on the worst-performing accounts

Change the terms of trade

Deposits, staged payments and direct debit mandates change the shape of your cash curve more than any collections effort. For recurring services, direct debit converts an unpredictable receipt into a certain one.

On the payables side, negotiate terms rather than simply paying late — paying late damages supply relationships and forfeits any early settlement pricing.

Control stock and work in progress

Stock and unbilled work in progress are cash sitting still. Review slow-moving lines quarterly and set a policy for how long work can remain unbilled.

In service businesses, unbilled WIP is frequently larger than the debtor book and receives a fraction of the attention.

Plan around tax dates

VAT quarters, PAYE months and the corporation tax due date are predictable. Setting aside a fixed percentage of receipts into a separate tax account removes the largest recurring cash shock most small businesses face.

If a payment genuinely cannot be met, contact HMRC before the due date — arrangements are far easier to agree in advance than after default.