Have you ever faced sleepless nights wondering how to cover payroll or pay vendors while waiting for a client’s late payment?

Small businesses thrive on ideas and ambition, but poor cash flow can bring even the best ventures to a halt.

Consider this: 82% of small businesses fail due to cash flow problems. They fail when it comes to managing small business cash flow. Can your business handle an unexpected expense tomorrow? Would you seize a growth opportunity or miss out due to lack of funds?

Take inspiration from a local bakery owner who transformed their struggling business by introducing prepayment plans and tracking expenses weekly.

They went from constant worry to predictable income in just months. How?

Case Study: Muddy's Bake Shop

Muddy's Bake Shop in Memphis, Tennessee, provides an example of effective cash flow management.

Owner Kat Gordon practices Open Book Management, emphasizing transparency with her team about financial matters.

By openly discussing costs, pricing, and expenses, the bakery ensures that all team members understand the financial health of the business. This approach has been instrumental in maintaining healthy profits and providing value to customers, staff, and the community.

Managing cash flow isn’t just about survival—it’s about growth and freedom. Let’s explore how you can avoid pitfalls and ensure your business thrives. Ready to take charge? Let’s dive in!

Steps to Manage Cash Flow

1. Plan your cash flow

Start out the right way! Make cash flow management strategies for small businesses.

Develop your business plan

Planning your business helps you prepare for the unexpected, find opportunities to grow, and make sure you don't run out of money. You also need a business plan to gain finance.

Fund your business

Organizing the right funding for your business can help you start up, grow and get through times when you aren't making money.

2. Organize Your Finances

Track Your Money:

Use cash flow management tools for small businesses and make smarter financial choices.

Keep Accurate Records:

Good record-keeping helps you see the real picture of managing cash flow for small businesses and make better business decisions.

Try Online Accounting:

Digital systems save you time by automating tasks and generating reports that clearly show your cash flow.

Set Up a Cash Flow Statement:

It shows all the money coming in and going out of your business. Use our free template to get started.

Make a Budget:

A budget helps you manage your money wisely, allocate it where it’s needed, and plan for future costs. Use our free template to simplify the process.

3. Put money aside

Make sure to save for important commitments like taxes and superannuation. Keeping this money in a separate account makes it easier to pay on time.

Know Your Tax Obligations:

Learn the tax rules you need to follow, including keeping records, registering for taxes, and how to pay them.

Prepare for Super Payments:

Know the steps for contributing superannuation for your employees, including how often payments need to be made.

Know What to Pay Your Employees:

Familiarize yourself with employee entitlements like minimum wages, leave, and allowances to ensure compliance.

Stay on Top of Deadlines:

Busy schedules can make it easy to miss due dates. Keeping track of what’s owed and when will help you avoid unnecessary financial stress.

4. Adjust your cash in and out

Boost Your Cash Flow:

Discover simple ways to bring in more money and spend less, and decide which changes work best for your business.

Review Your Prices:

Check if you can adjust your prices without losing customers. A small change can make a big difference.

Invoice Correctly:

Proper invoicing helps you get paid faster and avoid unpaid bills. Follow our steps to create and send clear, accurate invoices.

Reassess Payment Terms:

Look at how your customers pay and have a plan for handling late payments to keep cash flow steady.

Manage Your Inventory:

Keep track of what stock you have and its value. This helps you stay stocked up without spending too much.

Negotiate with Suppliers:

Work with your suppliers to find the best deals and build a relationship that benefits your business.

5. Check if you're on track

Regularly checking your progress helps you spot problems early and improve your cash flow before they become an issue.

Track Your Performance:

Review your finances regularly to identify any cash flow issues and resolve them quickly.

Watch for Warning Signs:

Learn to recognize signs of financial stress in your business and take action with our helpful tips to get back on track.

Stay on Top of Annual Tasks:

Use the end of the financial year to assess how your business performed. Our handy checklist ensures you don’t miss any important steps.

Do a Business Health Check:

Make sure your business is running smoothly and efficiently. From setting clear goals to seeking advice when needed, staying proactive keeps things on the right path.

6. Get help

Managing cash flow doesn’t have to be a solo journey. There are people and resources ready to support you every step of the way.

Get Financial Support:

Professional advice can make all the difference. From organizing your accounts to making smart business decisions, experts are here to help you stay on track.

Connect with an Adviser:

Find a business adviser who understands your needs and location. Whether it’s an online chat, a phone call, or an in-person meeting, some advisers even offer on-site visits to better understand your business.

Conclusion

Managing cash flow effectively is vital for the success and growth of any small business. By focusing on forecasting, reducing unnecessary expenses, and optimizing receivables, you can maintain financial stability and seize new opportunities with confidence. Cash flow management is more than a survival tool—it’s a pathway to building a sustainable and thriving business.

At Hudson & Empire, we understand the unique challenges small businesses face. Our team of expert CPAs is here to help you analyze your cash flow, plan for the future, and optimize your financial processes.

Contact us today to schedule a consultation and let us help you take your business finances to the next level!

How to Manage Cash Flow in Small Business?