Cash flow is the lifeblood of any business. Without it, even profitable businesses can struggle, while those who master it gain stability, growth, and financial confidence.

As an outsourced CFO, I’ve helped countless business owners get a grip on their cash flow; and trust me, it’s not as complicated as it sounds. Here are simple, actionable steps you can implement today to take control of your cash flow and forecast with confidence.

Join Our Next 30-Minute Lunch Time Free Online Webinar!

Learn practical cash management strategies to keep your business financially strong.

Register here: https://calendly.com/pauline-healey/cfo-workshop-cash-management-tips-for-your-business

First Start with the Fundamentals of your Finances;

1. Get Clear on Your Numbers

• Track income & expenses; Including any outstanding values not just future invoices.
• Categorising expenses; Know what’s essential vs. where you can cut back.
• Reviewing past trends; Identify patterns in cash inflow and outflow.

2. Keep on Top of Your Bookkeeping

Timely bookkeeping is a fundamental activity that cannot be overlooked. Your transactions tell the story of your business and provide the foundation for accurate cash flow management.

• Update records regularly; Avoid end-of-month panic and keep things up to date.
• Reconcile bank statements; Ensure no transactions are missing or duplicated.
• Use automation; Accounting software can help streamline and reduce manual errors.

Next Stage is the Planning and Improving of Cash Flow;

1. Build a Simple Cash Flow Forecast

Forecasting doesn’t need to be overwhelming. A basic 12-week rolling forecast can be a game-changer.

• List your expected income; Future sales invoices, known and forecast plus funding, etc.
• List your expected expenses; Payroll, rent, subscriptions, supplier payments.
• Don’t forget to include your dividends; Often forgotten to include within the forecast as no invoice attached, best to plan your desired monthly amount.
• Update weekly; Adjust based on real-time activity.
• Bonus Tip: Use a tool like Spotlight, Float, Fathom, or a custom Excel sheet allowing variables to automate the process.

2. Speed Up Your Cash Inflow

• Invoice immediately; The sooner you invoice, the sooner you get paid.
• Shorten payment terms; If you offer 30 days, try upfront or 7 days instead, especially with new customers.
• Chase overdue invoices; Automate reminders or have a clear follow-up process.
• Offer easy payment methods; Online payments, direct debits, and standing orders speed up transactions.

3. Delay (or Spread) Cash Outflows

• Negotiate better payment terms; Can you get 45 or 60-day terms with suppliers?
• Use direct debits & payment plans; Spread large costs over time.
• Plan for tax bills; Don’t let VAT or corporation tax catch you out. Set aside funds monthly and add the expenditure in your cash forecast.

4. Build a Cash Buffer

• Aim for 2 months, then build up to 6 months of expenses as an emergency fund.
• Put aside a percentage of profits each month to build the buffer.
• Open up a business savings account for any funds to gain a good rate of interest.
• Consider a business overdraft or line of credit as a backup, just in case.

5. Monitor & Adjust Regularly

• Review weekly; A 10/15 minute check-in can prevent nasty surprises.
• Adjust forecasts; Factor in changes in income, expenses, and unexpected costs.
• Stay proactive; If you foresee a shortfall, act early; cut costs, chase payments, or seek funding.

Ready to Take Control of Your Cash Flow?

Managing and forecasting your business cash flow doesn’t have to be daunting. With the right tools and habits, you can stay ahead, reduce stress, and make smarter business decisions.

Do you want customised cash flow insights tailored to your business? Creating super friendly and simple cash flow forecasts with a Scenario A, B, and C, with no ongoing subscription fee? Let’s chat!

Email: Hello@LogicalBI.com or Call: 01772 287400 or schedule a call direct with this link: https://calendly.com/pauline-healey/discovery-call-outsourced-fd-support;

 

Join Our Next 30-Minute Lunch Time Free Online Webinar!

Learn practical cash management strategies to keep your business financially strong.

Register here: https://calendly.com/pauline-healey/cfo-workshop-cash-management-tips-for-your-business

You may be interested in our previous blog: How to Analyse Your Business’ Financial Position – Logical BI
Let’s connect on LinkedIn: https://www.linkedin.com/in/pauline-healey/