How to Write a Business Plan That Strengthens Cash Flow
Writing a business plan is one of the most important steps any founder or business owner can take. A well written plan sets your direction, defines your goals, and helps secure finance. But while many business plans focus on revenue targets and market opportunity, too few directly address the everyday realities of running a business in the UK today. One of those realities is this: clients often pay late.
How to write a business plan that strengthens cash flow, and accounts for late payments and cash flow disruption is essential knowledge for SMEs. Missed income targets are rarely what puts small businesses in trouble. It is the cash flow gaps. The peaks and troughs between invoices issued and payments received.
In this guide, we explore how to write a strategic business plan that strengthens cash flow, improves resilience, and positions your business for sustainable growth.
What to Include in a Business Plan
A business plan must do more than tell a business’s story. It should help the reader understand how the business operates, generates income, manages risks, and grows sustainably. Key components to include are:
- Executive Summary: A high level overview of vision, structure, services, and goals.
- Market Analysis: Details about the industry, competitors, and customer base.
- Operational Plan: How will the business deliver its product or service.
- Marketing and Sales Strategy: The approach to reaching customers and generating leads.
- Financial Plan: Forecasts, funding needs, and financial controls.
- Cash Flow Statement: A projection of money flowing in and out of the business.
Government Crackdown: The 2025 Reform
Recognising that voluntary measures have failed, the government has introduced sweeping reforms:
Mandatory reporting: Large firms will be legally required to publish supplier payment data in their annual reports.
Reduced payment terms: The maximum standard payment period will drop from 60 to 45 days.
Interest and penalties: Statutory interest will be mandatory for late payments.
Board level accountability: Audit committees will be responsible for supplier payment behaviour.
New enforcement powers: The Small Business Commissioner will gain authority to fine repeat offenders.
The government is placing increased emphasis on real time accountability and transparency. When businesses are required to publish how they pay their suppliers, and directors are held responsible for poor practices, cultural change becomes more achievable. However, until these measures are fully enforced and proven effective, many SMEs remain exposed to the consequences of delayed income.
Many SMEs build out these sections with broad targets but miss the opportunity to stress test their working capital management. A good business plan shows not just how much profit to expect, but how and when payment is expected to be received. And will also show what happens when that payment is delayed.
How to Forecast Cash Flow and Payment Delays
Cash flow forecasting should be part of any robust financial plan. It must consider how the business will convert sales into cash, and what risks exist along the way. A complete forecast models:
- Standard payment terms.
- Realistic time to receive payment.
- Peaks and troughs in income.
- Delayed payment scenarios and their impact.
When working capital is calculated, it reveals how much liquidity the business holds after covering short term liabilities. Late payments reduce the amount of cash available, turning strong revenue into a negative working capital position. This can quickly impact the ability to meet payroll, restock, or pay suppliers.
Including these assumptions in a business plan demonstrates maturity. It shows funders or stakeholders an understanding of a working capital cycle, and that there are measures in place prepared for delays.
Setting Realistic Funding Goals
A common error when SMEs write a business plan, is underestimating how much funding is needed. Some unseasoned owners often assume that good sales will cover all costs. But what happens if customers pay 45 days late? What if a major order stretches your capacity before it brings in income?
When setting funding goals, be clear about what the capital is for. Will it be used to bridge cash flow? Support growth? Replace declining fixed assets? A strong plan does not just ask for money. It explains why that money is needed, how it will be used, and what the return will be.
This is where business funding options such as invoice finance can be used as a strategic funding tool. It is not a loan. Within invoice finance there are two main services: Recourse factoring, and disclosed invoice discounting. Both of these financial services release monies tied up in outstanding invoices, even when client payments are delayed.
When to Use Invoice Finance or Credit Control
If you are writing a plan for a B2B business, then invoice finance should be on your radar. It allows you to receive between 80 – 90% of your invoice value within 24 to 48 hours, supporting both short term needs and long term growth.
Different types of invoice finance include:
Disclosed Invoice Discounting: You retain control over your credit management.
Recourse Factoring: Combines funding with fully outsourced credit control and sales ledger management.
In your business plan, highlight any intent to use these financial tools and how they support continuity. Investors and providers will want to know how you intend to keep cash flowing. They will also want to understand how you protect your customer relationships. A provider offering credit control services can be a valuable part of this business plan.
How to Show You Are ‘Finance Provider Ready’
Many businesses lose momentum because their plans are too vague when it comes to funding. If your goal is to work with a lender or a small business finance provider, your plan must answer their key questions:
What are your payment terms, and how often are they breached?
Do you have procedures for chasing unpaid invoices?
What is your average debtor day count?
Have you experienced cash shortages?
What do you do to maintain positive working capital?
You should also present a clear balance sheet, and explain how you manage accounts payable and receivable. Reference your cash flow statement directly in your forecasting. Demonstrating awareness of these issues helps finance providers understand your risk and support your funding application.
Write a Business Plan That Keeps You Moving
Late payments are a horrible part of operating a business in the UK. They cannot be planned away, but you can plan around them. Building these assumptions into a business plan means you are being realistic, responsible, and resilient.
Whether you plan to grow through investment, expand operations, or simply maintain steady income, a well prepared business plan that strengthens cash flow is non-negotiable.
Invoice finance is widely accepted as a strategic form of funding that supports cash flow. We welcome you to contact us for more information on our SME funding solutions.
Chris Falby
With over two decades dedicated to helping businesses in the South East thrive, Chris, Sales and Marketing Director, brings a wealth of knowledge in securing financial assistance for SMEs. His career began in mainstream banking, where he gained valuable experience managing advances. This foundation, coupled with his extensive network and expertise in independent funding, allows Chris to provide tailored invoice finance solutions that meet the unique needs of each client.