Shorten the cash gap, boost the bank balance!

Welcome to our blog a regular publication by Mantle, with a focus on business growth, business value, decision making and performance management, in other words, all things that make a business better. Today’s edition is written by Laura Landmark.

Shorten the cash gap, boost the bank balance!

In SME’s cashflow is usually tight. Things can be fine one minute, then suddenly all hell breaks loose when one large supplier doesn’t pay on time, or the contract that was supposed to land is delayed. It is important to plan for a cash shortage. There are some important things to consider when it comes to cash flow management. If you have your eye on them, chances are, you will be able to manage through the rough patches and secure a long-term future for your business.

Be aware that profit is not the same as cash. You can be showing great results in terms of net profit, but if you fail to pull your cash in from your customers on time, or if you give them too much credit, you will be crippling your own business. We all need cash to roll in constantly to make the wheels go around.

Cash Gap – the big killer

Have a look at your “cash gap”. This is the number of days between paying out for something and receiving money in for that same thing. If you are a shop, you buy goods and likely pay for them before you sell them.  If you are a consulting company, you book hours and likely pay for your team before you invoice your client. Shorten the gap!

We need to aim to keep these cash gaps tight and short, as the gap represents all the money that is NOT in our bank account. When our money is out in other people’s hands it is a stressor and a risk. The longer the money is not in your bank the bigger the risk it will never arrive. That is called Sods law!

‘Gap’ is one of the major killers in SMEs, you can shorten it by making sure that you are getting nice long payment terms from your suppliers, and not being too generous with allowing your customer’s long terms, instead of 45 days, offer them 30, or better still 15. Try and get the money into your bank before you pay it out.

Never take your eyes off your cashflow – without it your business will die.

Shorten the gap!

Remember to actually send your invoices. Bizarrely lots of people get way too busy to send their invoices to their customers at month-end. Or better still; don’t wait till month end – send your invoices out continuously. The sooner the invoice is sent, the sooner you will get your money in. Remember, you are not a bank.

It’s not rude to chase your invoices

Always chase your late payers, never allow them the courtesy of treating you like their bank. Automate this process, make sure that a reminder goes out the day the customer fails to pay on time. If you have customers that are notoriously bad at paying on time, call them a few days before the invoice is due, and remind them of the due date. It is often the case of ‘he who shouts loudest’ being paid first.

We work very often on cash flow forecasting, and the important thing is to get it detailed and accurate enough that it really helps our customers manage it well. Especially in businesses where cash fluctuates wildly. Note, ‘enough’ is the operative word here. It doesn’t need to be too detailed, or too accurate. Remember it’s a forecast – it will never be 100%. Just get it good enough to paint the big picture.

There are other elements to managing cash flow that I haven’t covered here, it is a science and an art. As always, I recommend employing good tools to automate the cash flow forecasting process and deliver the insights quickly, so you can make decisions before it is too late (PM me and I will talk you through your options –

Those decisions can save your business. You may have a very full order book, but if you have no money to buy raw materials or pay employees then you are going to struggle to deliver.


Cashflow is a fact, net profit is just an opinion.

Something to listen to ?


Geraldine Carter is the CPA’s best friend, supporting them to build advisory services and take their practices to the next level.

After running a mini master class on forecasting for some of her clients she and CEO of Mantle Analytics Laura Landmark decided to do a follow up podcast, and here it is. Carving out time in life or business to ponder the powerful questions “what if” and “how” creates clarity around what we want to create, where we are heading, and what we want to avoid.

A rolling forecast can be a catalyst for a great dialogue for accountants and their clients, its not about the answers the forecast gives you, it’s all about the questions you address as you ponder your options.

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Mantle Analytics is a fusion of finance and technology started in Stavanger in 2017. We offer solid technological solutions that connect people and data so that you can make good business decisions quickly. The back-end work we do with the data feeds into user friendly reporting and visualisation tools.

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