Managing your SME's cash flow: 5 tips to avoid liquidity problems
Introduction
An SME can show an accounting profit and yet find itself in difficulty. The problem? Poor cash flow management. When money doesn't come in at the right time, you can't pay your suppliers, your salaries or your overheads. This is what we call a liquidity problem.
SME cash flow management isn't optional, it's essential. Unlike large companies with substantial reserves, Swiss SMEs must monitor their cash flow closely. A client paying 60 days late can be enough to create a domino effect.
Late payments are one of the main causes of cash flow difficulties. But other factors come into play: absence of a cash flow plan, late invoicing, lack of reserves or poor anticipation of quiet periods.
Here are 5 practical tips to manage your cash flow effectively and avoid liquidity problems. Simple actions that make a difference on a daily basis.
📌 Summary (TL;DR)
To avoid liquidity problems, set up a cash flow monitoring table, invoice immediately after each service and automate your payment reminders. Negotiate favourable payment terms with your suppliers, build up a safety reserve and anticipate your quiet periods with a forward-looking cash flow plan.
📚 Table of contents
1. Set up a cash flow monitoring table
Without visibility on your cash inflows and outflows, it's impossible to run your business with peace of mind. A cash flow monitoring table gives you this essential overview.
Create a simple document with these columns: date, description, inflows, outflows, balance. Update it at least weekly. The objective? Know in real time where you stand and anticipate liquidity needs.
Practical example: For a 3-month forecast, list all customer invoices to be collected (with expected dates), fixed costs (rent, salaries, insurance), VAT deadlines and other planned expenses. You immediately visualise the weeks when the balance risks going into the red.
This regular monitoring allows you to act before a cash flow problem arises. To go further, consult our 7 strategies to improve your cash flow.
2. Speed up collections with rigorous invoicing
SME cash flow management starts with fast and accurate invoicing. Every day of delay between the service and the invoice issue postpones your collection by the same amount.
A clear, compliant invoice sent immediately reduces the risk of disputes and speeds up payment. This is even more true with Swiss QR-invoices which simplify the process for your clients.
But issuing the invoice isn't enough. Payment tracking and systematic reminders make all the difference. Without an organised system, invoices slip through the net and your cash flow suffers directly.
The two essential levers: invoice without delay and automate the tracking of unpaid invoices. This is what we detail in the following sections.
Issue your invoices immediately after the service
Never let your invoices drag on. As soon as a service is completed or a delivery is made, create and send the invoice the same day or the next day at the latest.
Why this urgency? Because your cash flow depends directly on this delay. If you invoice with 30 days payment terms but wait 10 days before issuing the invoice, you'll collect in 40 days instead of 30. This week and a half can make the difference between paying your overheads on time or not.
The faster you invoice, the sooner the payment period starts running. And the sooner the money arrives in your account. It's mathematical and it's one of the simplest levers to improve your cash flow.
Automate payment tracking and reminders
Late payments are one of the main causes of liquidity problems for Swiss SMEs. Yet a simple reminder oversight can turn a normally paying client into a chronic non-payer.
The problem? Manually tracking all your invoices takes time and generates oversights. The solution: automate this process with a tool like BePaid.
BePaid allows you to visualise at a glance all your unpaid invoices and their status. No more rummaging through your emails or spreadsheets. Automatic reminders are sent at the deadlines you define, without any intervention on your part.
Concrete result: you save time, you don't forget any reminder and your recovery rate improves. Clients pay faster when they receive systematic and professional reminders. Discover the true cost of late payments and why avoiding them should be a priority.
3. Negotiate favourable payment terms
Payment terms are negotiated at the start of the business relationship, not when you need liquidity. Set short deadlines: 15 to 30 days maximum depending on your sector.
For large projects, ask for deposits. For example: 30% on order, 40% halfway through, 30% on delivery. You finance less of the project from your own funds and you secure your cash flow plan.
Another lever: offer a small discount (2-3%) for cash or early payment if your margin allows. Some clients appreciate it and you collect faster.
Don't forget the other side: also negotiate with your suppliers to extend your own payment deadlines. If you pay at 30 days and collect at 60, your cash flow suffers. Reverse the ratio when possible: collect at 30 days, pay at 45-60 days. It's a balance to find to improve your SME cash flow management.
4. Build up a safety reserve
A cash reserve is your safety net against the unexpected: a client who doesn't pay, a drop in activity, an urgent expense. The objective? Set aside the equivalent of 2 to 3 months of fixed costs.
This may seem like a lot, but this reserve is built up gradually. Set up an automatic transfer: for example, 10% of each collection goes directly to a dedicated savings account. You don't even see this money pass through.
Practical tip: open a separate account for this reserve. You avoid the temptation to dip into it for current expenses and you clearly visualise your safety cushion.
This financial discipline transforms your relationship with cash flow. You sleep better at night knowing you can last several months even if a problem arises. It's an investment in your company's stability, not an expense.
5. Anticipate and plan for quiet periods
All activities experience variations: seasonality, economic cycles, delays between signing and payment. Identifying these variations allows you to anticipate difficult months instead of suffering them.
Analyse your last 12 months: which months were weak? When do large payments arrive? When do you pay your major overheads (VAT, insurance, taxes)? This analysis reveals your at-risk periods.
Plan accordingly: schedule your major investments during strong months, not during troughs. Create a forward-looking cash flow plan over 6 to 12 months to visualise liquidity needs in advance.
If certain months are structurally weak, adapt: diversify your revenue sources, temporarily reduce certain variable expenses, or negotiate payment facilities for your fixed costs. Anticipation transforms a potential cash flow problem into a simple planned adjustment.
Cash flow management cannot be improvised. Regular monitoring, rigorous invoicing, negotiated payment terms, a safety reserve and anticipation of quiet periods constitute the pillars of solid financial health for your SME.
Invoicing plays a central role in this system. The faster you issue your invoices and the more effectively you track your payments, the less likely you are to find yourself in liquidity difficulties. Automatic reminders and structured collection tracking transform your daily management.
BePaid simplifies precisely this critical part of your cash flow: creation of compliant QR-invoices in a few clicks, automatic payment tracking, scheduled reminders and bank reconciliation. Try BePaid for free and see how well-organised invoicing concretely improves your cash flow.
