Take the 5% challenge

How could releasing 5% of your turnover as cash help your business?

Take the 5% challenge

"A company that undertakes a programme of working capital improvement can expect to release between 3% and 5% of their turnover as cash from working capital."

Llewelyn Mullooly
Director, Working Capital
Bank of Scotland Commercial Banking


Practical steps to better manage your cash flow

How you can make sure your business has enough working capital

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Exporting can stretch your cash flow as your trade cycle increases. Check out our 5 strategies to optimise your cash flow when trading overseas.

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To discuss how we can support your business by making more of its working capital, please speak to your relationship manager or email us.

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 Our range of banking solutions can help you unlock your cash flow and boost your business growth. Take a look at some of the options available here.

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Bank of Scotland Working Capital Index


A unique barometer of working capital pressures on British businesses

Learn more about working capital and how proactive management can help your business grow


Best practice proactive working capital management creates new growth opportunities

Llewelyn Mullooly
Director, Working Capital
Lloyds Bank Commercial Banking


Tips & Advice

How to improve your working capital position

  • Effective management of working capital should begin with a review of your cash management processes, practices and systems. Take a thorough look at how you are working today and how you compare with your competitors. For companies with a turnover above £3m, our Working Capital Tool can assess your current position and benchmark you against your peers. Once you know your weaknesses, you can make improvements in areas such as invoicing, tracking late payments, stock control, and extending your own payment terms.

  • How long does it take your business to generate cash? A lengthy cash conversion cycle – i.e. the time between purchasing inventory through to receiving payment from sales – can starve a business of cash. The quicker you are paid, the better your cash flow. Focus on bringing cash back into the business as quickly as possible by automating and accelerating the cycle, raising and sending invoices in a timely fashion and collecting outstanding sums efficiently.

  • Reviewing your suppliers can help you check that they’re delivering value for money and that their payment terms are in line with your cash conversion cycle needs. For example, if payments to suppliers are due before you receive payment from your customers, it will impact your working capital cycle. Discounts for early payment may sound tempting, but if they mean you’re exceeding your overdraft each month, they may be costing you. Reviewing contract terms is also important, particularly if you’re tied to fixed supply quotas but customer demand varies, otherwise you’ll be paying for stock to sit around.

  • Make the cash in your business work harder by tightening up processes for both income and expenditure. For example, review your procurement processes to make sure you benefit from potential discounts, and take a look at your stock levels to spot slow-moving or obsolete items that could be removed from your product line. Forecasting demand can help ensure orders are fulfilled on time but excessive stock holding is avoided. You may also want to consider whether alternative stock and production methods, such as just-in-time processing, could work for your business.

  • Maximising sales and boosting add-on sales to existing and potential customers can improve your cash position, as long as you’re balancing that against the increased costs of servicing those sales and making sure you’re paid on time. A clear pricing strategy that’s regularly reviewed can also be effective, particularly if products are proving hard to shift, or where you’re attempting to gain competitive advantage, or corner a market. The key is to keep cash flowing through your business.

  • Global trading conditions and payment terms vary widely and can increase your cash conversion cycle. For any company trading internationally, it’s vital to understand different payment cultures and work practices, and our International Trade Portal provides a comprehensive overview of trading risks. Financial benchmarking will help to identify opportunities, and digital tools such as data-driven diagnostics can improve working capital processes.

  • Effective cash management can help your money work harder. A blend of instant access and fixed term deposits means you can optimise returns and cash availability. Understanding where you have excess cash that can be put to use is important in making your cash work harder, earn the best returns possible and help you achieve your short and longer-term plans.

    Why not take a look at our range of solutions that can help you manage your working capital more effectively?

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