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Cash Flow Management: How to Keep Your Business Financially Healthy

Tuesday, 8th April, 2025


For any business, whether it's a small start-up or a thriving franchise, cash flow is king. It's not just about how much money you're making; it's about how effectively that money moves in and out of your business.


A business owner reviewing financial documents with a calculator, symbolising effective cash flow manangement.

What is Cash Flow?

Cash flow is the net amount of cash being transferred into and out of your business. Positive cash flow means more money is coming in than going out, ideal for covering expenses, investing in growth, and building financial stability. Negative cash flow, on the other hand, can quickly lead to trouble, even for profitable businesses.


Why Cash Flow Problems Happen

Some common culprits include:


  • Late payments from clients

  • Overstocking inventory

  • Uncontrolled expenses

  • Seasonal dips in revenue

  • Lack of planning


The good news? All of these issues can be managed with the right strategy in place.


7 Practical Tips to Improve Your Cash Flow


  1. Forecast Your Cash Flow: Create a rolling cash flow forecast that looks 3-6 months ahead. Anticipate slow periods, tax deadlines, or large payments so you're never caught off guard.


  2. Speed Up Receivables: Encourage faster payment from customers:


    - Send invoices properly

    - Set clear payment terms

    - Offer early payment discounts

    - Use automated reminders


  3. Manage Payables Smartly: Don't pay bills earlier than necessary. Take advantage of the full payment terms your suppliers offer, unless early payment earns you a worthwhile discount.


  4. Watch Your Expenses: Audit your outgoings regularly. Are there subscriptions or services you're not using? Can you renegotiate supplier contracts?


  5. Build a Cash Reserve: Set aside a portion of profits during high-revenue months. This safety net can cover unexpected expenses or seasonal slumps.


  6. Finance Wisely: Consider short-term financing (like a line of credit) to bridge temporary gaps in cash flow, but use with caution and always with a repayment plan.


  7. Get Professional Support: An experienced accountant can spot cash flow red flags early and help you set up systems to stay ahead of the curve.



Remember: Profit is important, but cash is what keeps your business alive. Manage it wisely, and your business will be in a strong position to grow.


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