Cash Flow Management | Wilko tries Improve Cash Flow by Moving to Monthly Rent Payments

A classic example of a business trying to smooth and improve its cash outflows to help manage cash flow.

This is Money is one of several news outlets reporting how homewares retailer Wilko is changing the timing or how its pays rent to its shop landlords.

Rent is one of the most significant fixed costs of operating physical retail stores. Traditionally rent is paid "in advance" each quarter (or every three months).

So for example, the shop rent for the period October to December would normally be paid in late September.

However, like other retailers, Wilko is struggling to manage cash flow and is suffering from a high level of gearing.

The effect of this change is to improve cash flow in the first two months of each quarter.

A smart move - provided shop landlords agree. Although in reality they don't have much choice but to accept monthly payments.