Managing Your Cash Flow

Published

Five steps to manage your cash flow better

3 Mins

You’re not the first person to struggle to work out how to manage cash flow in challenging times, and you won’t be the last.

Firstly, please don’t kid yourself that a fantastic new client will just walk in the door and sign up for a massive order. Although this would be great, it very rarely happens. Secondly, a white knight won’t suddenly appear offering you a substantial cash injection for 20 per cent of your equity.

All too often, I see businesses struggling with cash flow that rely on one of the above happening.

For the long-term health of your business, adopting a better cash flow management strategy is essential.

So what should you do? Here are five ways you can better manage cash flow in business:

1) Be realistic with your cash flow forecasts

Sound cash flow management starts with an honest cash flow forecast on a week-by-week basis for the next two months, and then monthly thereafter. This may put your mind at rest that there is sufficient cash coming in. 

On the other hand, if it’s not positive it will at least show you how much is needed to maintain the business. Although much has been said about the banks’ reluctance to lend, the reality is that banks do want to lend but need a proper ‘pack’ of financial information and a forecast before they can evaluate a business properly. 

If you cannot show them you have a solid understand of how to manage cash flow in business, do not expect any new funds to be heading your way.

2) Get expert help on how to manage cash flow

If cash flow does extend beyond your existing facility then don’t despair. Look at your expenditure and see if you can defer some of your commitments over a period of time. Please, don’t just phone everyone up and ask for an extra 60 days credit but take time to flex your cash flow so that creditors can be paid over an extended period. 

If, no matter what you do, it looks like you are going to run out in, say, two or three months then don’t hide away and hope for the new client/white knight. Instead, go and see a professional, be it your accountant, lawyer or turnaround professional who knows how to manage cash flow even in the most challenging of circumstances. You’ll be surprised what can be done.

Read more cash flow tips on page two…

Share this story

How to scrap your business plan and turn your pivot into a success in four steps
How to stop your top talent heading for the door
Send this to a friend