Cashflow resilience: build a payment strategy that works

Cashflow is the lifeblood of every business, yet for many SMEs and startups, it’s also the number one source of stress. 

Customers pay late, suppliers want their money on time, and leaders are left juggling spreadsheets, phone calls, and overdrafts.

In fact, according to a SCORE report, 82% of small business failures are linked to cashflow problems. 

One of the biggest causes isn’t a lack of sales, but rather the mismatch between when money comes in and when it has to go out.

Cashflow headaches are avoidable with a clear payment strategy, one that balances supplier terms and customer payments. 

Why cashflow pain is so common

At first glance, cashflow seems simple: money in, money out. But when customers take 60 or 90 days to pay while suppliers demand settlement in 30, the gap becomes a choke point.

This gap creates three dangerous outcomes:

• Working capital strain. You end up dipping into reserves or credit lines to cover basics like payroll.
• Growth delays. Expansion plans stall because cash is locked up in receivables.
• Relationship risk. Paying suppliers late can damage trust or even cut off supply.

The Federation of Small Businesses found that late payments cost UK SMEs £2.5bn every year. 

For younger businesses, even one major late payment can derail survival.

It’s not always about selling more. It’s about designing terms and systems that align.

Why chasing invoices isn’t enough

Simply chasing late payments isn’t a sustainable strategy. It may address the symptoms, but it doesn’t solve the root problem.

• Wasted time and energy. Founders and finance teams often spend mornings chasing payments instead of focusing on growth.
• Damaged relationships. Persistent chasing can sour client partnerships. One report found that 61% of SMEs are paid late by large buyers, and a third dip into overdrafts to cope.
• Perception risks. Repeated reminders can make a business appear fragile, eroding client trust.
• Escalating pressure. A 2025 Intuit Quickbooks report revealed that 62% of UK SMEs are owed unpaid invoices, averaging £21,400 each.

Chasing payments is reactive and draining. Proactive strategies that align customer and supplier terms build long-term resilience.

Building a resilient payment strategy

Here’s how founders and CEOs can create a strategy that works both ways.

1. Align supplier and customer terms from the outset

Don’t wait until contracts are signed to think about cashflow. Be proactive in negotiations.

If your customers expect 60-day terms, push for matching flexibility with suppliers, or offer suppliers partial upfront payments to secure longer terms.

It’s also a smart idea to build escalation clauses so you can revisit terms if customer delays become chronic.

2. Use technology to automate the basics

Cashflow resilience comes from visibility. Tools like Xero, QuickBooks, or Sage can automate invoicing, track outstanding payments, and send reminders before invoices are overdue.

Benefits include:

• Less manual chasing.
• Clear dashboards for real-time decisions.
• Audit trails that strengthen your case in disputes.

Research from QuickBooks shows SMEs using digital tools get paid on average five days faster than those relying on manual invoicing. 

Not every customer will accept shorter terms, but you can encourage faster settlement in a number of ways:

• Offer small discounts for early payment.
• Introduce phased payments for long projects (e.g. 30% upfront, 40% on delivery, 30% on completion).
• Be firm about penalties for overdue invoices and follow through.

Many agencies structure retainers with upfront monthly billing, ensuring predictable income while reducing debt risk.

4. Strengthen supplier relationships

Trust and transparency with suppliers is key to effective relationships. 

• Open communication wins flexibility. Many suppliers are more willing to extend terms when they trust their buyers. Transparent forecasting, early warnings about potential delays, and a track record of reliability often lead to more favourable arrangements.
• Supply chain finance (SCF): Large companies like Walmart pay suppliers upfront via financiers while extending their own terms. SMEs can access scaled-down versions of this model through fintech providers.
• Trade finance for exports. One UK manufacturing SME expanded overseas by using export trade finance to bridge 60–90 day customer cycles against 30-day supplier terms.
• System breakdowns matter too. A UK study found 36% of late supplier payments were the result of admin errors, 31% from disputes, and 23% from technical issues, not deliberate delays (gov.uk).

Supplier relationships benefit from trust, communication, and creative financing tools, thus avoiding confrontation.

Summary

Cashflow problems don’t only affect businesses that aren’t selling enough. 

They hit companies that haven’t aligned their payment ecosystem.

By designing supplier and customer terms strategically, automating cashflow visibility, strengthening supplier relationships, and building buffers, you reduce risk and unlock capacity to grow.

Vestd helps founders and leaders design and manage share schemes that align teams, improve retention, and build long-term value. Book a call to find out how.