6 December 2025
Table of contents
Table of contents
It can be hard to keep track of suppliers in a business. You’ll want to make sure you’re getting the best deals throughout your supply chain, as well as keeping that all-important cash flow looking healthy at every stage.
In this blog we explain why cash flow management is so important in a supply chain, and what it means for your cash flow.
Supply chain management (SCM) is the process of overseeing the flow of any goods or services within your business:
Reviewing and managing your supply chain can help protect cash flow in your business. For example, if you keep ordering stock that isn’t selling, or order too much at a time, it could tie up funds that are needed elsewhere.
Having that overview and insight into your business will help you understand what’s working and what isn’t – just remember that supply chain management is always a work in progress!
You can use supply chain metrics such as:
If you’re in charge of managing the supply chain for your business (or even if you’re the only person in your business!), it’ll be your job to improve its efficiency and reduce costs where you can – increasing your chances of a positive cash flow.
What to consider
How you obtain any raw materials
Your manufacturing sites (including how big they are, their location, etc)
How your customer orders are processed
Inventory management
Your order dispatch process
What it means
Where they're sourced, the time it takes to source them, and any agreements you have with suppliers. Raw materials might also include items you need to deliver a service.
The volume of goods the site can process (and how fast), the distance between sites, how goods move from one site to the next, and how efficiently you use the space – even if all this takes place within a home workshop.
The customer order is an integral part of managing your supply chain – it’s both the trigger and the end point of the cycle
How you collect and dispatch your inventory has a huge impact on your supply chain – as well as how long your inventory is stored (which might affect your storage costs and therefore your profits).
This is how any inventory is removed from your warehouse or storeroom, processed, and shipped to your customer.
You move from a cheaper courier who isn’t very reliable, to one who costs more but always delivers on time. The number of cancelled orders and requests for re-delivery is reduced, and your reputation improves – both of which improve cash flow.
The simple answer is by checking your cash flow statement! Supply chain cash flow is all about balancing the total amount of payments scheduled to go out to suppliers, versus the total amount you expect to receive from customers and other revenue sources in the same time period.
Lots can go wrong in a business, such as suppliers underperforming by taking their time with supplying the goods or sending poor stock, technology issues, or errors in your forecasting.
This means it’s vital to try and build a strong cash reserve, so if you do have a small blip while running your business – you don’t need to panic.
Effective management is key to ensuring you stay on top of your cash flow, but we understand it can sometimes be tricky to keep your head above water, especially in the face of unexpected expenses.
If you have a good relationship with your suppliers, there’s nothing stopping you from negotiating prices, or even asking for discounts if you order things in bulk. If you’re struggling with cash flow problems or feel they may arise, you could also discuss extending your current payment terms.
Maintaining a great relationship with suppliers means your communication will be consistent and you’ll work together to keep your customers happy. If not, you might feel it’s time to review the suppliers that you’re working with.
Customers who are late paying the bill are a common cause of disruption to a business’s cash flow. Even though people should pay on time, every business owner has experienced someone who simply won’t pay. If you want them to pay today, you could give them a one-off discount, or add terms stating overdue payments will have interest added on to them (this may make people pay much faster, reducing any cash flow issues).
It’s also worth looking into using an invoicing system which includes automated payment reminders!
You’ll find technology can automate a lot of the supply chain process for you, ensuring there is a reduction in errors, as well as helping you save money.
An example of this is your inventory management. If you use our very own Pandle for example, you can manage your inventory stock in ‘items.’
Items is our inventory management system that helps you automatically track stock levels in real-time. You can also add items to your invoices to populate all the details you need quickly (which makes your supply chain run much more efficiently).
Learn more about using Pandle to make business accounting easier. Create an account today and decide what to do with all the extra time you get back.
A creative content writer specialising across business, finance and software topics. I have a love for all things writing, and creating engaging, easy to understand content that helps everyday people!
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