12 Cash Flow Tips for Businesses

Cash can, quite literally, make or break a business.  It’s an incredibly important asset to any business, so here are our top 12 cash flow tips for businesses.

Realistic Forecasting

As sales people, business owners and managers we have to be optimistic.  However, translating that optimism into wishful forecasting, over egging the amount of money you expect to come in, isn’t good.  It’s unrealistic and, if you’re planning your activity or cash outflows around that cash in, you’re going to come unstuck very quickly.

Be realistic with your forecast, err on the side of caution if you’re not 100% sure on something.

Monitor Spending

Impulse spending and unnecessary spending can easily impact on cash flow.  It’s important to have a plan for what you’re spending your money on, and to stick to that plan.

Inevitably costs will crop up that you hadn’t planned for, in that scenario you should stop and assess the benefit of whatever you’re about to spend money on, before you spend it.  This will all result in control over your costs and, therefore, your cash outflows.

Know Your Customers & Suppliers

If you’re engaging in a new business relationship, you should be checking the business out so you know what kind of business structure is in place and who the ultimate owner of the company is – as they’ll be paying you, or you’ll be paying them.

You should also run a credit check on the business! 

If you get the biggest order of product X you’ve ever had, you don’t want to buy in all the raw materials and start making the product only to find the new customer has gone belly up, and now you can’t shift product X and have raw material bills to pay.  Similarly, you don’t want to engage Company B to build your super snazzy online system, only to find that half way through the project, with your fees to date paid, they’ve gone bust and can’t finish it for you.

Contracts and Terms and Conditions

Once you know who you’re dealing with, you need to know what terms and conditions you’re being held to, or what you’re holding them to.  Are there credit terms at play?  What are they?  By what standards are they going to operate?

Contracts, service level agreements, non-disclosure agreements and terms and conditions are a necessary part of business.  They’re there to mitigate the risk your business is exposed to – so make sure you have them in place!

Invoice in a Timely Manner

Your customers can’t pay you until you invoice them.  If you don’t invoice them for two weeks, then they have two weeks to pay the invoice, that’s an extra two weeks before you get that cash into your bank.

Invoicing should be done as soon as possible, whenever the product is shipped, the service is completed – whatever it is that you do, invoice, invoice, invoice, as soon as possible.  Have a process to ensure that this gets done!

Payment Systems and Services

Make it easy for your customers to pay you.  Do you customers constantly ask to pay you by credit card?  Then you should have the means to accept card payments.  There’s a plethora of technologies and services out there for businesses of all sizes to utilise in order to receive payments from customers easier and quicker.

Card services can be attached to invoices so clients can pay with the click of a button from the emailed invoice.  Direct debit services can take payment for invoices when they become due, or a set amount on a monthly basis – this negates the need for the customer to do anything to trigger the payment at their end.

Clever utilisation of payment systems and services not only gets the cash into your bank quicker, it also reduces the time and cost involved in credit control.  If you’re not using something like this already, I strongly urge you to get something in place asap.


The ideal working capital cycle of a business is that the business’s customer pays, before the business has to pay its suppliers.  For example, if you’re selling product X to Company Y, and have had to purchase raw materials from Company A in order to do that, then in an ideal world Company Y will pay you before you have to pay Company A. 

This all evolves around timing and credit terms; it’s very important to try and marry up credit terms between customers and suppliers.  This ensures you’re not stretching yourself too thin from a cash flow point of view.

If your customers pay you in 30 days, pay your suppliers in 60.  Negotiating credit terms is key.  As is, in some instances, clever utilisation of payment methods; paying for something with a credit card, for example, can often give you an even longer period of credit.

Direct Debits & Subscriptions

Once you sign up for a direct debit, how much get’s taken is up to the company operating the direct debit.  Therefore, its imperative that you monitor your direct debits to ensure only the amount you’re expecting to pay is taken.

On a slightly different note, monitoring subscriptions is key as well.  I challenge you to find someone who hasn’t accidentally paid an extra month or two of a subscription because they forgot to cancel it when it came due or didn’t realise it was up for renewal.  Paying for unnecessary things is dead money, so monitor your subscriptions and ensure this doesn’t happen.

Cash Reserve

Business doesn’t always go to plan, there are often hiccups along the way.  This is why it’s important to have a cash reserve in place, to carry you through the hiccups and ensure your business remains strong as it weathers any storms.   Ideally your cash reserve can carry your business for a few months if it really needed to. 

So, know how much you need as a cash reserve, and save it.  Utilise separate bank accounts for cash reserves, and also VAT and tax payments.  Be vigilant with the money set aside for other things, don’t dip into on a whim – it’s there to either pay tax bills, replace vital equipment or carry your business, should it need to.

Actual Cash Flow

Know what your cash in and out flows actually are!  Know what day you need to pay suppliers, or that direct debits come out of your bank account.  Know when customers are going to pay you.  Knowledge is power – you should know what your cash flow is.

Forecast Cash Flow

Once you know the actual, forecasting you cash flow is the next step.  More knowledge is more power; knowing what the in and outflows of your business are for the next few months etc is very powerful.  You’ll know if there are any cash flow issues coming up, before they arrive.  This means you can manage those issues and mitigate their impact.  You can also capitalise on cash influxes.

Sustainable Growth

Having systems and processes in place to safeguard cash flow, monitor it and forecast it all means that you can sustainably grow your business, and reach your goals – whatever they may be.

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