How to Stop Cashflow Crises in Engineering SMEs

Introduction - Stop Cashflow Crises

In construction and engineering, cashflow problems rarely come from one big disaster. They come from small delays that stack up:

• a quote that sits in someone’s inbox for a week

• a job that drags on because of call-backs

• an invoice that doesn’t go out until “Friday when we get time”

• credit control that starts at 60+ days (when it’s already too late)

  
  

The frustrating part? You can be profitable on paper and still feel broke.

Cashflow isn’t just “finance”. It’s the direct result of how your business runs day-to-day, quoting, scheduling, completing, invoicing, and collecting.

And this is not just a “big business” issue. SMEs and fast-growing firms feel this more sharply because your cash buffers are smaller, and one bad month can disrupt wages, suppliers, and growth plans.

If you want useful supporting reading from JFA’s Daily Blog, these posts are worth bookmarking:

• Working capital weekly control: https://www.jonesfa.co.uk/post/working-capital Jonesfa

• Credit control risks (late vs no payment): https://www.jonesfa.co.uk/post/risks-in-credit Jonesfa

• Forecasting without guesswork: https://www.jonesfa.co.uk/post/forecast-revenue-profit-cash Jonesfa

• Scenario planning for cost and timing shocks: https://www.jonesfa.co.uk/post/sensitivity-analysis-explainedJonesfa

1) Delays in Quoting Work (You’re Starving Next Month’s Cash)

What it looks like

• “We’re busy, we’ll quote it later.”

• Quotes go out days (or weeks) after the enquiry/site visit.

• You win work… but the start date slips and cash arrives late.

Why it hurts cashflow

Quoting is the front door of your cash cycle. If quoting is delayed, you don’t just lose revenue, you lose timing. And timing is everything when wages, VAT, PAYE and suppliers don’t wait.

Fix it (practical steps)

• Set a quoting SLA: 24–48 hours for small works, 5 working days for larger tenders.

• Split quoting: technical scope vs commercial pricing so it doesn’t bottleneck one person.

• Track two KPIs weekly:

  • quotes issued vs enquiries received

  • average days to send a quote

Common myth: “We’re too busy to quote quickly.”Reality: if quoting is slow, you’ll be even busier later, but with worse cash.

2) Delays in Completing Jobs (And Multiple Call-Backs)

What it looks like

• Jobs “nearly done” for weeks.

• Engineers revisit sites because the first visit didn’t fully close the work.

• Small issues left open that delay sign-off.

Why it hurts cashflow

In construction and engineering, completion triggers payment:

• completion certificate

• customer sign-off

• handover docs

• final account agreement

Every call-back adds:

• extra labour cost

• extra van time

• and the biggest killer: delayed invoicing

Fix it

• Introduce a “first-time fix” checklist (parts, photos, RAMS, access confirmed).

• Make call-backs visible: track them as a KPI (call-backs per engineer / per job type).

• Add a rule: no job leaves “in progress” without a next action date and owner.

Real-world gain example If a £30k job completes 10 days earlier, and your average debtor cycle is 30 days, you’ve pulled cash forward by 10 days. Do that across 10 jobs and you’ve effectively freed cash without borrowing.

3) Slow Invoicing (Waiting for “That One Person”)

What it looks like

• Site team finishes work, but finance can’t invoice because:

  • job sheet isn’t submitted

  • variations aren’t approved

  • someone is “too busy” to confirm values

• One person becomes the single point of failure.

Why it hurts cashflow

You don’t get paid for work you haven’t billed. Simple.

In fast-growing SMEs, invoicing delays are often the #1 avoidable cause of cash pain.

Fix it

• Make invoicing part of operations, not “finance admin”.

• Use a simple weekly rule:

  • Monday: confirm completed jobs

  • Tuesday: issue invoices/applications

  • Friday: chase anything not approved

• Put invoicing on a dashboard:

  • value completed this week

  • value invoiced this week

  • difference = cash you didn’t ask for

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To support the discipline, JFA’s free tools page includes a Credit Control Procedures Checklist, Late Payment Letter Templates, and a 13-Week Cashflow Forecast Template, all designed for construction/engineering SMEs. https://www.jonesfa.co.uk/resources Jonesfa

Common myth: “We invoice monthly, that’s standard.”Reality: monthly invoicing is fine if the business is built around it. Most SMEs aren’t, they have weekly costs and monthly invoicing, which creates predictable cash stress.

4) Not Using Credit Properly (Still Scared of Short-Term Debt)

What it looks like

• You avoid overdrafts or invoice finance even when you’re growing.

• You pay suppliers early “to be safe” while clients pay late.

• You delay buying stock/parts, which slows delivery and pushes cash further out.

  
  

Why it hurts cashflow

Growth eats cash. Even healthy growth.

If your business is profitable but cash is tight, short-term funding can be a tool, if it’s planned and measured, not used in panic.

Fix it

• Separate “bad debt” from “smart working capital funding”.

• Use a 13-week forecast so you only draw credit when needed (and you know when you’ll repay it). https://www.jonesfa.co.uk/resources Jonesfa

• Match funding to the job cycle:

  • long stage payments + heavy upfront costs = you may need working capital support

• Track:

  • gross margin %

  • debtor days

  • funding cost as a % of revenue

    
    

Common mistake: Taking credit without fixing the process.Credit can buy time, but it won’t solve slow quoting, delayed completion, or weak invoicing.

5) Ineffective (or Non-Existent) Credit Control

What it looks like

• Chasing starts at 45–60 days.

• Finance sends generic reminders only.

• Ops keeps working for customers who haven’t paid.

Why it hurts cashflow

Credit control is not “sending emails”. It’s a system:

• clear payment terms

• clear approval process

• fast dispute resolution

• escalation that involves management early

JFA’s credit-control blog breaks down the two biggest risks clearly: late payment and no payment. https://www.jonesfa.co.uk/post/risks-in-credit Jonesfa

Fix it

• Start chasing before due date (confirm invoice received, ask if anything blocks approval).

• Escalate by day 14 overdue, not day 60.

• Make it cross-department:

  • if a client is overdue, ops and management must know

• Use templates and a step-by-step policy so the process isn’t emotional or inconsistent. https://www.jonesfa.co.uk/resources Jonesfa

Common myth: “Chasing damages relationships.”Reality: unclear expectations damage relationships. Professional, consistent chasing builds respect.

A Simple CFO-Level Routine (That Fixes Most Cashflow Problems)

If you do nothing else, implement this rhythm:

Weekly (30 minutes):

• cash forecast next 4–13 weeks

• invoices issued vs completed work

• aged debtors (top 10)

• WIP / unbilled value

• biggest costs due next 2 weeks

Monthly:

• management pack with commentary and actions

• margin by department / revenue stream

• working capital movement (debtors, creditors, WIP)

This is exactly the discipline that stops “surprise cash crises” becoming normal.

Key Takeaways

• Cashflow pain is usually operational: quoting, completion, invoicing, and collection timing.

• Delays stack up, fix the process early, not when the bank balance is low.

• Use short-term credit as a planned tool, not a panic button.

• A simple weekly routine gives you control faster than any “big finance project.”

If your cashflow feels unpredictable right now, don’t default to “we need more sales” or “we need a bigger overdraft.” Start by tightening the five areas above and use a forecast to stay ahead of the pressure.

If you want the templates we use with clients (cashflow, credit control, management review), they’re free here: https://www.jonesfa.co.uk/resources Jonesfa

Wrapping up today's insights, tomorrow we simplify another accounting challenge.