Business Essentials

Cash Flow Management

When speaking to anyone about running a business the term 'Cash is King' will often come up as managing your cash flow is the most important aspect to running your own business. It can be confusing but simply put cash flow is monitoring the amount coming into and out of a business.

We have put together this article with information about the various considerations of cash flow for a business.

FreeAgent have made a full extensive guide to cash flow, along with examples and a free template which can be found here.

Cash Flow Webinar

Grant Thornton & HSBC ran a free webinar to help businesses with understanding their cash flow, the loan guarantee scheme and other Government support during the Covid19 crisis.  

Please click below to view their recording with the password t9!31*?^)


The presentation and cash flow template from the above webinar can be downloaded below


Never take your eyes off the cash flow because it’s the lifeblood of business

Sir Richard Branson

Prioritising cash flow

Monitoring your cash flow allows you to know how much money you owe, how much is owed you and how much is in the bank. Most business who get into trouble do not pay enough attention so do not have the money to pay bill on demand. You should regularly update your financial records to ensure they are accurate. Most advisors would suggest to do this weekly and most accounting software packages have tools to produce a cash flow report.

Planning, forecasting and setting goals

When starting a business often you will have a period of time when you are spending money to setup the business and are not making enough sales to be in profit, it is good at this point to do some forecasting and set a goal date of when you will start to make a profit.

Regularly reviewing your cash flow will allow you to forecast for upcoming with estimating the number of sales coming in and the expenses going out. When starting out this can be difficult to estimate the number of sales for a set period but the longer your business is active, the more experience you will have and the more accurately you can predict sales numbers.

If you can see a dip in sales or upcoming large expenses you may need to arrange a loan or overdraft extension. 

Payment terms and credit

Payment and credit terms can sometimes cause businesses to stumble. The standard payment term for most invoices is 30 days however if you cannot afford to wait 30 days for payment you can elect to put shorter deadlines on invoices.

Before granting credit to a customer you should perform a credit check and be careful not to over grant credit as if a customer fails to pay it can cause serious issues to your business. Likewise if you buy something on a credit account ensure you plan ahead to make sure you have the funds to pay once the payment date arrives.

Managing cash flow, top tips from Natwest

Natwest, like all banks, understand that cashflow management can be a problem for many small and growing businesses so have put together a handy '7 steps to better cash flow management' which covers,

  • Manage late payments
  • Check for customers creditworthiness
  • Be organised
  • Be professional
  • Manage stock and inventory effectively
  •  Free up cash reserves
  • Have a contingency plan

You can find out more about their top tips and information on managing cashflow here:

Find out more

FreeAgents Guide How to make a cash flow forecast

Find out more

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