14. Collect Cash Faster Than You Spend It

Tighten debtor days so buyers do not inherit your cashflow headaches

Problem Statement

Plenty of owners run decent businesses that constantly feel short of cash. Sales look fine, profit is respectable on paper although the bank account tells a different story. Customers pay when they feel like it, debtor days drift upward, suppliers want their money on time and the owner ends up smoothing the gaps with overdrafts plus personal funds.

When a buyer arrives they do not only look at profit. They look at how quickly cash turns up. Slow collection makes them nervous. It signals extra risk, extra funding and extra hassle they will need to sort once you have left the building.

What An Owner Might Say

“Our customers are good people. They always pay eventually. I just never quite know when.”

“If everyone paid on the 20th we would look amazing. Instead I spend half my life nudging people and hoping nothing big bounces this week.”

Why It Happens

Cash collection habits grow quietly over time. At the beginning you feel grateful for every sale. You offer easy terms, skip deposits, extend deadlines for anyone who asks nicely. Good relationships matter, so you let small delays slide. Those small delays become the norm.

Systems often lag behind growth. Invoices go out late. Statements do not match reality. No one quite owns follow up. Staff feel awkward chasing because they fear upsetting customers. Owners promise to tidy the process once things calm down. Things rarely calm down.

There is also a story many owners tell themselves that “our industry just works like this”. Payment always seems delayed, so asking for something better feels pointless. Buyers are less sentimental. They want to see evidence that cash behaves in a predictable, professional way.

What To Do About It

Start with the facts. Pull a simple report that shows debtor days for the last year plus aged receivables by customer. Look for patterns. Who pays reliably. Who always drifts into ninety day territory. Which months felt tight and how that links to late payments. This is not about blame. It is about seeing clearly.

Review your terms with fresh eyes. Ask whether they match the value you provide and the cash cycle you carry. Many SMEs can justify tighter terms for at least part of their work, especially where labour and materials are committed early. Consider deposits, progress payments, milestone billing or shorter standard terms for new customers.

Clean up how you invoice. Send invoices quickly, in a format customers can process without questions. Make sure purchase order numbers, contact names and descriptions are clear. Confusing invoices invite delay because they sit in someone’s “query later” pile.

Offer easy ways to pay. That might include direct debit, automatic card payments, online links or clear bank details on every invoice. The more friction you remove, the fewer excuses customers have. For regular services, automated collection can be a game changer for both cashflow and stress.

Create a simple, polite follow up rhythm. For example, a friendly reminder a few days before due date, another just after, then a firmer note after a set period, followed by a call. Decide these steps in advance so you are not inventing them when annoyed. Keep the tone respectful and steady.

How To Keep The Momentum

Assign clear ownership. Someone in the business needs responsibility for keeping debtors within agreed limits. That person does not need to be scary. They do need to be consistent. Give them training, a script and your backing when they hold the line.

Track debtor days like a vital sign. Put a small set of collection metrics on your regular management dashboard. Overall debtor days, total overdue, plus the list of top late payers. Talk about these numbers until good behaviour becomes part of how the business sees itself.

Support staff who face tricky conversations. Provide phrases that protect relationships while still asking for payment. For example, linking prompt payment to continued service priority. When staff feel safe raising the topic, they are far more likely to act early rather than hope someone else will fix it.

Be prepared to change your mind about certain customers. If a client is always slow, always demanding and rarely profitable, consider whether they truly deserve the credit you extend. Sometimes the bravest exit move is to reshape or gradually let go of relationships that constantly hurt cash. Buyers notice when problem accounts quietly dominate your aged debtors.

Bake collection into your wider exit planning. As you approach your target sale window, aim to bring debtor days down to a level that feels boringly stable. A buyer will pay more for a business where cash turns up dependably than for one with higher paper profit and permanent collection drama.

Golden Nugget

“Profit is a promise. Cash in the bank is proof buyers can believe.”

How RegenerationHQ can help

RegenerationHQ works with owners who are tired of white knuckle cashflow yet unsure how to shift habits without upsetting customers. We begin by mapping how money really moves through your business, from quote to invoice to payment, then highlight the practical places where debtor days can shrink without breaking relationships.

Together we design clearer terms, tidier invoicing routines and realistic follow up rhythms that suit your sector plus your team. Where needed we work alongside your accountant or software provider so the tools you already use support better behaviour instead of getting in the way.

We also help you turn improvements into a stronger sale story. That includes simple reports, plain language explanations and a narrative that shows how tighter debtor control has stabilised cashflow in the years leading up to exit. Buyers see a business that collects cash faster than it spends, which is exactly the sort of discipline that supports a cleaner deal and a more respectful price for the work you have put in.

If you want a steady guide beside you while you get ready for one of the biggest decisions of your working life, RegenerationHQ is ready to help you walk that road with clarity and confidence.