Cash Flow Management

Why growth is the dangerous phase

The businesses that run out of money are frequently not the failing ones. They are the ones growing fastest.

The arithmetic is unforgiving. To grow, you buy stock before you sell it, hire staff before they are productive, and deliver work before you invoice it — then wait for payment. Every dirham of additional revenue therefore consumes cash before it produces any, and the faster revenue grows, the wider that gap opens.

A business growing at 40 per cent with sixty-day receivables and thirty-day payables is funding a substantial working capital requirement out of its own resources, whether or not anybody has calculated it. Profitability does not protect against this. It is what makes it invisible.

Which businesses this applies to

Growing businesses, particularly where growth is faster than 20 or 30 per cent a year. Construction and contracting businesses, where payment terms are long, retention is held and certification adds delay. Trading businesses carrying stock. Any business with customer concentration, where one late payer is a crisis rather than an inconvenience.

Also businesses approaching a bank for a facility, which requires a credible forward view rather than a request, and businesses that have had a near miss and would rather not repeat it.

The work, step by step

What this looks like in practice:

1. Build the thirteen-week forecast from actual commitments — receivables by expected date, payables by due date, payroll, rent, tax, loan repayments, capital spend.
2. Establish the working capital cycle. Days receivable plus days stock minus days payable, which tells you how many days of trading you are financing.
3. Fix collections first, because it is nearly always the largest and quickest improvement available.
4. Review payment terms on both sides — what you offer customers and what you accept from suppliers, both of which are usually inherited rather than negotiated.
5. Address stock where it is material: slow-moving lines, over-ordering, and the safety stock nobody has recalculated since it was set.
6. Model the scenarios: the largest customer paying thirty days later, a contract delayed, a facility withdrawn.
7. Arrange facilities before they are needed, because a business seeking finance while comfortable is a much better proposition than one seeking it while short.
8. Establish the weekly rhythm: forecast updated, actual versus forecast reviewed, decisions taken with a view of the next quarter.

Collections, in order of effectiveness

Almost every business we work with has more available in its receivables ledger than in any other single improvement. And most collection problems are process problems rather than customer problems:

• Invoice immediately. Days lost between delivery and invoicing are days added to every subsequent stage, and they are entirely self-inflicted
• Confirm the invoice was received and is approved. A large share of ‘late’ payments are invoices sitting unapproved because nobody checked
• Contact before the due date, not after. A short call a week before payment is due changes outcomes more than three chasing calls afterwards
• Escalate on a schedule rather than on frustration, so it happens consistently and without a relationship cost
• Make it easy to pay — correct details, correct reference, correct contact, the right documentation attached
• Apply the terms you agreed. A business that never enforces terms has effectively offered different ones

None of this requires being difficult with customers. Most of it is administrative discipline, and the businesses with the worst receivables are usually the ones with the least consistent process rather than the worst customers.

Where VAT and tax fit into cash

Tax payments are the most predictable large outflows a business has, and they are the ones most often planned for least.

VAT collected is not revenue — it is money held on behalf of the authority and payable by the twenty-eighth of the month following the tax period. A business treating VAT-inclusive receipts as available cash is borrowing from the next return, and the shortfall arrives on a known date.

Corporate tax is due with the return, nine months after the year end. That is a substantial and entirely foreseeable outflow. Businesses in a structural refund position have the opposite issue — cash tied up in credits — and for them monthly filing where available and prompt refund claims are worth real money.

All of it belongs in the thirteen-week forecast as a committed outflow, not as a surprise.

Common mistakes

The expensive mistakes in this area are consistent:

• Managing cash from the bank balance, which shows the past and none of the commitments already made.
• Invoicing weekly or monthly when it could be immediate, adding self-inflicted days to every collection.
• Chasing only after the due date, which is the least effective moment to make contact.
• Treating VAT collected as available cash, and finding the return due on a date that was always known.
• Seeking a facility while short rather than while comfortable, which is a materially worse negotiating position.
• Growing without modelling the working capital requirement, which is how profitable businesses fail.
• Stock levels set once and never revisited, financing demand that no longer exists.

When this needs to happen

The thirteen-week forecast is built once and updated weekly — weekly, not monthly, because the point is to see problems while there is still time to act.

Working capital improvement is a programme rather than an event, usually over a quarter. Facilities should be arranged when the business is comfortable, which is precisely when nobody feels the need to, and that is the argument for the forward view.

What you end up with

• A thirteen-week cash forecast, updated weekly
• Working capital cycle measured, with the improvement opportunity quantified
• A collections process that runs consistently rather than on frustration
• Payment terms reviewed on both sides
• Scenario analysis on the outcomes that would actually hurt
• Facility requirements identified ahead of need, with the case prepared

What to have ready

To start, we need:

• Bank statements and current balances across all accounts
• Aged receivables and payables listings
• Payment terms offered to customers and accepted from suppliers
• Payroll costs and dates
• Loan and lease repayment schedules
• Tax payment dates and expected amounts
• Committed capital expenditure
• Details of facilities and covenants

How this is priced

The forecast build and working capital review are a fixed-fee project. Ongoing weekly maintenance is either handled by you — we build it to be maintained — or included in a CFO retainer.

This is one of the few pieces of work where the return is usually straightforward to see: a fifteen-day improvement in collections on a business with meaningful revenue releases cash that far exceeds the fee, and it releases it permanently rather than once.

Related

Frequently Asked Questions

Last reviewed 27 July 2026. Rates, thresholds and deadlines change — the e-invoicing provider deadline has already moved once. Confirm current requirements with the Federal Tax Authority before acting, or ask us to check your position.