Tips to Maintain a Steady Business Cash Flow

Cash flow management is the management of the movement of money within a company: inflow and outflow in settlements with suppliers and customers, thanks to investment, lending, financing. Don't confuse flows with profit. Profit is the company's income minus expenses.

It is more important for entrepreneurs to monitor cash flows than profit. If the flows are negative, then the company will not be able to pay bills, purchase material, pay salaries to employees. The entrepreneur's task is to balance the flows so that the inflow of funds is always higher than the outflow.

Why is it so important to manage cash flows in the company

At the initial stage in business, the issue of cash management is especially acute. When it is not yet possible to take out loans, there is only a small start-up capital, a positive cash flow will give the necessary impetus. You can buy materials, pay salaries to workers, and start production.

Positive cash flow is an alternative to loans and borrowings. You don't have to borrow money from banks if you can "borrow" it at the cash desk. But for this, you will have to learn how to balance the inflow and outflow of money so that there are no cash gaps.

How to keep records

The main step to managing cash flows in an organisation is proper accounting. Record all incoming transactions, costs, recurring costs, and one-off costs. Use accounting software. They will help you make a forecast, track trends, and identify lagging links. If you record everything, you will be able to forecast sales and determine future cash flows. How an inventory system can simplify your business.

Tips for keeping records:

Different accounts

Separate personal and business accounts. Better not to use the same account: it will be difficult to track your own funds and those of the company.


Plan recurring payments in advance. Calculate how much money you have to pay per month for utilities, salary payments, purchase of materials. Budget these expenses right away.

Try to accumulate funds

There is always a possibility that the customer may be late in payment or even refuse your services. In order not to be left without money for operating expenses, do not clean up all profits from the account.

Hire an accountant

If there are too many transactions, hire an experienced accountant. He will help you plan expenses so that cash flows are always positive.

Tricks of managing and generating positive flows

Work on a prepaid basis

Make sure the down payment covers your ordering costs. Deferred customers should be served last.

Encourage customers to pay on time

Try to serve them faster, give them discounts or preferential terms. Conversely, limit deliveries to those customers who are late payment. Track unpaid invoices regularly and remind customers to pay.

When paying to suppliers, try to stretch out the debt as much as possible

The later you send money to the supplier, the more time you will have to manage it. But don't go too far - act within the contract.

Optimise your inventory

Don't accumulate products that sell poorly. A full warehouse is frozen money. It is better to sell the product at a discounted price than to risk spoiling the product.

Drive sales, not prices

If some product sells faster than others, this is not a reason to raise its price. Fast turnaround leads to fast scaling. Increase your positive cash flow by increasing the volume of goods, increasing the customer base. This is more promising than increasing prices and depending on a few customers.

Debt Collection Tips

The biggest problem most businesses in Australia face in servicing cash flow is ensuring timely payments. Where companies operate on a prepaid basis or upon the provision of a service or sale of a product, everything is simple. You just need to correctly manage inventory. For companies that work with deferred payment, here are some tips on how to get money from clients on time:

-Claim a portion of the payment in advance and make sure that this first installment covers your necessary expenses

-Use professional, easy-to-read invoices to understand which services to pay for.

-Stimulate customers who pay early or on time, and penalise those who pay late

-Track unpaid invoices on a regular basis. Be polite, but firm with your customers.

-Don’t neglect professional help. Professional debt recovery Brisbane can easily help you out with this issue, so you don’t need to worry about it.

-Limit shipments to customers that cause problems with cash flow, late payments.


Cash is a major topic when it comes to the financial management of a growing company.

Managing your cash flow correctly means increasing your small business's chances of success. Remember to keep track of all expenses and income and analyse the information. Elementary calculations will help improve the financial condition of the company without loans and borrowings.

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Comment by Jessica Pollard on November 26, 2020 at 13:40

Great practical article! Thanks for sharing! 

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