Almost half of small companies struggle to get customers to pay on time and over a quarter regularly ask to extend credit terms, according to research.

The study, conducted by business finance firm Hilton-Baird on behalf of the Asset-Based Finance Association, concluded that cashflow problems are likely to increase as the impact of the credit crunch, high interest rates and soaring energy prices hits the UK economy.

"This is likely to result in many UK small companies having to tighten their belts, particularly with customers continuing to pay late," said Alex Hilton-Baird, founder and managing director of Hilton-Baird Financial Solutions. "If they haven't already done so, companies should review the way in which they currently finance themselves."

Hilton-Baird offers the following tips on how to make the most of your cashflow:

Get on top of credit control
Make sure that your terms and conditions are reviewed on a regular basis and that invoices are raised on time. The sooner you raise an invoice, the sooner you are likely to be paid. Make sure signed delivery notes are collected. That way you reduce risk of disputes, delayed payments and the debt not being paid

Put effort into overdue balances
The cost of financing outstanding balances can be substantial as the longer a balance is outstanding, the higher the risk of it becoming a bad debt. Make sure you invest time and resource to reduce your risk. It is worth bearing in mind that there are funding facilities which can release the cash tied-up in your ledger and help your cashflow

Motivating the sales team
Consider incentivising your sales teams to sell to customers that will ultimately pay. While increasing turnover is important it shouldn't be at the expense of profitability

Credit checks
Develop a habit of credit-checking customers before making the sale as it pays in the long run. Also put key customers and suppliers on constant review. This will alert you to any material changes to their business, such as the late filling of accounts, change in directorships, downgrading of credit ratings, change of address or change of advisers, which are all initial indicators of instability

Share information
Don't be afraid to talk to your competitors about their experience of selling to customers, particularly ones that you may share. Are they experiencing problems collecting money? If so, you may wish to consider your stance on supplying that particular customer. What are they doing to address the situation?

Review funding arrangements
Ensure you review existing finance agreements with your funders. Make time for a detailed check of loan agreements to see what facility terms are and what security has been pledged

Shop around
Benchmark your existing funding facilities to see if you are getting the best deal. You might be surprised at what deals are available

Correct funding
Make sure that you are funding the correct assets with the correct finance facility. You'd be amazed how often this is not the case. Also, ensure that your chosen funding facility is sufficient to meet your current as well as future needs

It pays to talk
Funding providers don't like surprises. So keep them abreast of good or bad news. They will appreciate your honesty and you will build trust, allowing you time to work through the options

Take advice
If you are unsure about your next step in the wake of the fallout from the recent credit crunch, then seeking independent advice is recommended