Cash flow pressure doesn’t always mean a business is failing. This article explains why working capital, funding structures and banking relationships are often the real issue — and how directors can regain control before pressure escalates.
One of the most common frustrations we hear from directors is this: “The business is profitable, but there’s never any cash.” On paper, everything looks fine. In reality, the bank balance tells a very different story.
This disconnect usually comes down to working capital. Cash gets trapped in stock, slow-paying debtors, long project timelines or rigid payment terms. When that happens, even strong businesses can find themselves stretched, stressed and vulnerable — particularly during seasonal slowdowns or periods of growth.
Understanding your cash conversion cycle is a good place to start. This is simply how long it takes for cash to move from suppliers, through operations, and back into the business from customers. When that cycle blows out, pressure builds quietly. Directors often respond by working longer hours, pushing sales harder, or leaning further on overdrafts — but those actions rarely fix the underlying issue.
Funding structure matters just as much. Many businesses rely on facilities that were set up years earlier, when the business looked very different. As trading conditions change, those facilities can become restrictive rather than supportive. Covenant breaches, tightening credit limits or last-minute bank conversations are often signs the funding model no longer fits the business reality.
This is where exploring broader funding options can help. Non-bank lenders, asset-based facilities and tailored working capital solutions can provide flexibility when traditional banking options stall. These aren’t emergency measures — when used properly, they can stabilise cash flow and buy time to execute a broader turnaround or growth strategy.
Equally important is how and when you engage with your bank. Too often, conversations happen late, under pressure, and without a clear plan. Banks respond better to structure than stress. When directors can clearly explain what’s happening, what’s changing, and how cash flow will be managed going forward, negotiations tend to be far more constructive.
At Wisdom Business Consultants, we work with directors to bring clarity to these situations. That means unpacking working capital issues, reviewing funding structures, and helping businesses prepare for lender discussions before options narrow. It’s not about chasing more debt — it’s about aligning capital with how the business actually operates.
Cash flow pressure doesn’t mean failure. But ignoring it, or hoping it resolves itself, increases risk quickly. When capital and cash flow are understood and actively managed, directors regain control — and the business has space to move forward with confidence.
