Profit and cash are not the same thing. A business can be profitable on paper and still be unable to pay salaries or suppliers because cash is tied up in stock or unpaid invoices. Strong cash-flow management keeps your business alive while it grows.
1. Separate business and personal money
Use a dedicated business account. Pay yourself a defined salary rather than withdrawing whenever you need cash.
2. Forecast weekly
Maintain a simple 13-week cash-flow forecast showing expected money in and money out. It is the best early-warning system you can have.
3. Invoice promptly and follow up
Send invoices immediately, state clear payment terms and follow up on overdue amounts consistently and professionally.
4. Manage stock carefully
Excess inventory is cash sitting on shelves. Track what sells, reorder based on data, and clear slow-moving items.
5. Negotiate supplier terms
Longer payment terms from suppliers — matched with shorter terms for customers — free up working capital.
6. Build a cash reserve
Aim to keep at least one to three months of operating costs in reserve for emergencies and opportunities.
7. Review monthly
Compare actual cash flow to your forecast each month and understand the differences. Small adjustments made early prevent big crises later.
Need help setting up financial systems and reports? Our Business Consultancy team can help.
