Is Cash Flow Keeping You Up At Night?


Apparently, that’s cash flow! I know that standing at our kitchen counter holding the utilities bills, we have that thought; “ugh, I just paid this!” But did you know that it keeps our small business and entrepreneur friends up at night, too? In fact, according to a study conducted by QuickBooks, 69% of small-business owners are up at night fretting over cash flow constraints. Furthermore, they found that 2 in 5 businesses reported having issues and that a third will be unable to pay themselves, their vendors, their loans, and those very near and dear to us, the employees!


For us young, eager, super excited startups and first year businesses, we’re making some beginner mistakes. For one, we’re spending too much too early. It’s so easy to do, right? We’ve all heard that you have spend money to make money, and we all want all those operational tools and shortcuts to bring us success sooner. Second, we have a tendency to overestimate our budgets and forecasts. We tend to be maybe a little overconfident in our process, our sales abilities, and the speed at which we can make receivables and payables match.

Our more experienced business owners struggle for some of the same reasons, like overspending, but their biggest pitfalls come to the concept of timing. Not coordinating actual cash receipts and outflows (or being aware of really when things are moving), not having a cash cushion to allow for slow times (and even more importantly, during times of growth!), and being passive in regards to their accounts receivable while at the same time paying your accounts payable early, all play into very real cash-flow traps.

Here are some suggestions to get all of that under control so your business can live and thrive:

  1. I hate to be repetitive so I’ll double up on this first one; KNOW your numbers inside and out, and secondly, work with a professional. If you’re awesome at what you do, but don’t have the time, energy, or maybe even the know-how, why spin your wheels when help is a phone call or click away?
  2. Pay yourself first, take a percentage of whatever is coming in, and drop it into an escrow/safety/emergency-rainy-day account. You are going to need it and it will make your life so much easier.
  3. Leverage software to keep track of things and make a point of looking at it regularly. Not like all day, every day; clearly, that’s dumb. But it will help you with timing of income and payments, it will help you get leverage if you’re up-to-date before growth even begins, it helps you identify problem areas and inefficiencies, and it will help your poor accountant at tax time.
  4. DO NOT let your accounts receivable (you know, that money people owe YOU) linger out there in their wallets, when it could be in yours or invested in your business. Workflows and clearly defined processes help a lot here. Set a specific number of days for payment, and specific number of days before letters and reminder emails go out, and if that isn’t getting success, pick up your phone! My friend, you are not a bank! Well, unless you are, then that’s on you. One thing that might help speed up and automate the process could be making it easier for people to pay you. Do you only accept cash or check? Maybe you could offer online or other digital payment. Coincidentally, this would often help with invoicing, tracking, and staying on top of outstanding receivables, too.
  5. Control your payables. Just like you, your vendors, payroll, and other bills all have specific due dates. Make that cash available only on those times, not early, but within their windows of payment. Obviously, you have to pay your bills but maintain some discretion on when it leaves your hands. An opportunity to possibly save a little money AND control when cash is going, out in this regard, is your payroll. Don’t be Scrooge, pay your employees and pay them well, so they take care of the business. But maybe pay bi-monthly instead of bi-weekly. You’ll have two less payments to make (24 instead of 26) and you’ll save time and money on preparing the payroll for those distributions. Taking it a step further, instead of cutting checks and postage, adopt direct deposit!

In this world, Cash is King. I want you to be the King and I want you to feel great about your financial life and business. There are tons of other things we can do, short of raising our prices, that can make our businesses more efficient and less like work to run. Cash-flow is one of those things. Here were 5 suggestions; take the helm or ask for help.