A cash flow problem means your limited company has bills due before the money to pay them arrives, even if it's profitable. The fastest fixes are collecting what you're owed sooner and agreeing new terms with suppliers and HMRC before a payment is missed. Borrowing can bridge a timing gap, but it can't fix a business that's losing money.

In iwoca's survey of 1,005 small business owners, published on 16 April 2026 alongside our Cash Flow Resilience Benchmark, 28% had two months or less of cash in reserve, and 60% had more money going out than coming in for at least half of the year. With a buffer that thin, one late payment can be enough to cause a gap.

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The fastest ways to fix a cash flow problem

Start with the fixes that bring cash in or push payments back within days: chase overdue invoices, ask for deposits, and talk to suppliers and HMRC before a payment is missed. Cutting costs and changing prices take longer, and borrowing can bridge a timing gap while they work.

The list below runs roughly from the quickest fixes to the slowest:

1. Chase overdue invoices first. The average small business is owed £22,000, according to the same iwoca survey, so money you've already earned is usually the quickest cash to unlock. Chasing late payments by phone, with a statement of everything that's due and a date to pay by, gives the customer a clear next step.
2. Invoice as soon as the work is done. Every day between finishing a job and sending the invoice adds a day to the wait.
3. Talk to your suppliers before a payment is due. Ask for longer terms or to split a large bill. Asking before a payment is late keeps the conversation about terms rather than arrears.
4. Contact HMRC early if you can't pay a tax bill in full. HMRC may agree to let you pay in instalments through a Time to Pay arrangement.
5. Ask for deposits or stage payments on new work. Part of the price upfront covers the materials and wages the job needs.
6. Hold back spending that can wait. Delay equipment purchases, large stock orders, and new subscriptions until the gap has closed.
7. Sell stock that isn't moving, even at a lower margin, so the cash isn't sitting on a shelf.
8. Review prices and costs. This is the slowest fix, and the main one that works if the business is losing money.
9. Bridge a timing gap with finance. A loan, a credit card, or a way for your customers to pay later can cover the weeks until cash arrives. iwoca offers all three, for UK limited companies.

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Timing gaps and losses need different fixes

A timing gap means the business is profitable but cash arrives after bills are due, so it can be bridged. A structural loss means costs are higher than income over time, and borrowing only delays the problem.

A cash flow forecast is the clearest way to tell which one you have, yet only 26% of small business owners in iwoca's survey forecast their cash flow monthly. Your net cash flow for a month is the cash that came in minus the cash that went out. It's different from profit, and from free cash flow, which looks at the cash left after investing in equipment and other long-term assets.

Early warning signs of a cash flow problem include:

• A bank balance that's lower at the end of each month than the month before
• Paying suppliers later than you agreed
• A tax bill coming up that you're not sure you can cover
• Relying on an overdraft or credit card for regular bills
• Customers taking longer to pay

Once the immediate gap is closed, managing cash flow week to week, with a rolling forecast and clear payment terms, makes the next one easier to see coming.

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A worked example: waiting on a 60-day invoice

This illustrative limited company finishes a £30,000 job on 60-day terms with £12,000 in the bank and £17,000 of costs due in the next month. It's £5,000 short by day 30, even though the job is profitable, and each fix below closes that gap in a different way.

The figures are an example, not data. The £17,000 is £9,000 of wages and £8,000 of materials for the next job, and nothing else comes in until the customer pays on day 60.

Each fix has a cost of its own: a deposit or early payment can mean offering a small discount, longer supplier terms can mean a higher price, and borrowing costs interest. Two smaller fixes together can be cheaper than relying on one.

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Common causes of cash flow problems and what to do first

Most cash flow problems come from one of a handful of causes: late payment, growth that outruns cash, seasonal sales, stock that isn't selling, rising fixed costs, debt repayments, tax bills, or trading at a loss. Knowing which one you have tells you where to start.

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If your company is already short of cash

Talk to the people you owe before the deadline, starting with HMRC for tax, and claim what you're owed by late payers. If you can't see how the company will pay its debts, take advice from an accountant or a licensed insolvency practitioner early.

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Talk to HMRC before a tax deadline

If your company can't pay a tax bill in full, contact HMRC as early as you can: you may be able to agree a Time to Pay arrangement and pay in instalments. VAT and PAYE are money your company has collected for HMRC and your employees, so treat them as a priority.

HMRC will ask how you'll pay as quickly as you can and check that your plan is realistic and affordable. It expects you to reduce the debt as much as possible first, for example by releasing assets such as stock or vehicles. The steps are on GOV.UK, in If you cannot pay your tax bill on time.

PAYE deducted from wages and VAT also rank ahead of ordinary unsecured debts if a company enters formal insolvency, for insolvencies that started on or after 1 December 2020 (HMRC as a preferential creditor on GOV.UK). Corporation tax and employer National Insurance don't.

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Claim statutory interest on overdue invoices

When another business pays you late, the law lets you claim statutory interest of 8% a year plus the Bank of England base rate, and a fixed sum towards your recovery costs. You can't claim it if your contract sets a different rate.

To add the interest, send a new invoice that includes it. The fixed sum depends on the size of the debt:

The rules are on GOV.UK, in Late commercial payments: charging interest and debt recovery. Charging interest can affect the relationship with a customer, so some companies use it as a last step before formal recovery.

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Take insolvency advice early if debts can't be paid

A company is insolvent when it can't pay its debts on time, or owes more than it owns. If that's where your company is heading, take advice from a licensed insolvency practitioner early, because your duties as a director shift towards protecting creditors.

That means avoiding new debt the company has no reasonable prospect of repaying, and not paying some creditors while leaving others unpaid. Advice taken early leaves more options open, such as an informal agreement with the people you owe. The Insolvency Service sets out directors' duties on GOV.UK, in Director information hub: insolvency.

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How iwoca can help with a cash flow gap

When the gap is about timing, the fix is to get paid sooner or to cover the weeks until the money arrives.

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Bridge the gap until your customer pays

With a Flexi-Loan, you can borrow from £1,000 to £1m and repay early for free. That means you can clear it as soon as the invoice you're waiting on is paid. You only pay interest on your outstanding balance for the days you borrow.

Chris Billingham, founder of Muscle Squad, has used a Flexi-Loan to fund stock deposits, and describes borrowing in line with his sales cycle: 'We go through waves of borrowing a significant amount and paying back a significant amount. You need the conviction that a good period is only around the corner.'

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Pay a supplier now and clear it before interest applies

With the iwoca business credit card, you pay no interest for up to 42 days if you repay your balance in full and on time. That suits a supplier bill that's due a few weeks before your customer pays you.

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Start accepting payments with iwocaPay

• Trade customers split payments into 1, 3, or 12 monthly instalments
• Online and in store, on orders up to £30k
• You get the funds instantly, every time, with no recourse

Find out more about iwocaPay

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Other ways to finance a cash flow gap

Other kinds of finance can also bridge a gap, and each suits a different cause. The table lists the main options alphabetically, with who they can suit and what to watch for.

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Borrowing works best when you can see how you'll repay

Borrowing is worth considering when the gap is temporary and you can see where the repayment will come from, such as an invoice you've already raised. If the gap comes from losses, or your company is already struggling to repay existing debts, borrowing more can make things worse.

Before you borrow, check that:

• You can name the money that will repay it, such as an invoice or a busy season
• The repayments still fit your forecast if the customer pays late
• You've tried the fixes that don't cost interest first

It's easier to make that decision before the gap than during it. In iwoca's April 2026 survey, 38% of small business owners said they'd need more than 30 days to secure extra funding. HMRC arrears can also show up in credit checks and count against an application. Before you apply, iwoca Credit Compass shows your company's Equifax business credit score and four more scores for free, with suggestions on what to improve.