Cash flow is the lifeblood of any business, and managing it effectively is crucial for long-term success. Poor cash flow management is one of the top reasons start-ups fail, with 82% of businesses closing their doors due to cash flow issues. To avoid this, it’s important to implement strategies that ensure a steady revenue inflow and careful handling of expenses.
Some key steps to improve cash flow include invoicing promptly after a sale or service, adhering to credit terms with suppliers and customers, and regularly auditing your expenses. Maintaining a cash flow statement will help you track cash coming in and out of your business, ensuring you always have enough working capital to cover operational costs.
Signs of Poor Cash Flow Management
| Sign | Description |
| Delayed Supplier Payments | Consistently paying suppliers late, risking strained relationships and late fees. |
| Frequent Cash Shortfalls | Regularly running out of cash to cover daily operational expenses. |
| Over Reliance on Credit | Increasing reliance on credit or loans to meet regular expenses. |
| Inconsistent Invoicing
Unclear Financial Forecasting |
Invoices are sent late or irregularly, delaying cash inflows.
No regular forecasting to predict future cash needs and plan accordingly. |
| High Outstanding Debts | Customers frequently delay payments, leading to large amounts of overdue invoices. |
By taking these actions, you can keep your business financially healthy and avoid common pitfalls associated with poor cash flow management.
Key Steps for Managing Cash Flow
| Action | Key Tip |
| Invoice Promptly | Send invoices immediately after service/product delivery. |
| Enforce Credit Terms | Pay suppliers on time; follow up on overdue customer invoices. |
| Know Your Break-Even | Calculate daily/weekly break-even to cover costs and plan ahead. |
| Track Cash Flow | Use a cash flow statement to monitor income and expenses. |
| Audit Expenses Regularly | Review and control costs like mileage and marketing expenses. |
Need help managing your cash flow? Please contact Angela at Unit 11, Eastgate Way, Little Island, Cork. 021 4824723 or info@agassociates.ie.
