How to improve operating cash flow

Step 1 — cut your debtor days

The single biggest lever for most businesses is getting paid faster. Invoice immediately, make payment easy, chase the moment an invoice is overdue, and set clear terms up front. Every day you shave off your debtor days releases cash straight into operating cash flow. See how to reduce debtor days.

Step 2 — reduce stock holding

Cash sitting as unsold stock earns nothing. Clear slow-moving lines, tighten reorder points, and move toward ordering little and often where you can. For stock-heavy businesses this is often the largest single pool of trapped cash, and freeing it improves operating cash flow directly.

Step 3 — take fair supplier terms

Paying suppliers on the full agreed term — not early, not late — keeps cash in your business longer at no cost. Where you can negotiate longer terms as a reliable customer, do. This is the third leg of the cash conversion cycle, and lengthening it fairly improves cash without spending a penny. See how to negotiate better supplier terms.

Step 4 — protect and improve margin

Cash flow starts with margin: a business that makes more on each sale generates more operating cash from the same activity. Review pricing, cut waste, and drop unprofitable lines or customers that consume cash without contributing. A modest margin improvement compounds through the whole cash cycle.

Step 5 — bridge what timing leaves

Even a well-run cycle leaves a timing gap during growth or a seasonal swing. Where operating improvements do not fully close it, a short facility covers the interval.

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