Understanding Your Small Business’ Cash Flow

Understanding Your Small Business’ Cash Flow



What is Cash Flow?

Cash flow is the net amount of cash and cash equivalents (short-term commitments that are easily convertible into a known cash amount) moving into and out of a business. As a small business owner, you know you should always have more money coming in than going out. Negative cash flow has been the downfall of many businesses, both big and small. If you’re worried about cash flow in your business, take a look at our article ‘5 Main Causes of Small Business Cash Flow Problems’. It covers the main causes of cash flow problems in relation to:

  • Seasonal Changes
  • Stock Overflow
  • Financial Planning
  • Late Payments
  • Overhead Expenses

In the market for something more industry specific? Well if you’re in the hospitality industry we have an article just for your: ‘Main Cash Flow Problems for the Hospitality Industry’. It looks at the cash flow problems that can happen to a business in the hospitality industry and how they might be helped.


Get your Cash Flow Template here


Cash Flow Management

It can be difficult to know what the ‘Best Practices for Managing Cash Flow’ are sometimes. Things like getting an annual audit and creating a cash flow forecast can be invaluable to a small business. But let’s face it; as a small business owner, you have to do everything, so things that seem simple may get put off. It’s important not to do this with regards to cash flow as it can make or break any business. For some basics on cash flow management, we recommend checking out ‘Managing Your Small Business Cash Flow Part One, Part Two and Part Three’.


Cash Flow Management Strategy

A cash flow management strategy is something that every business should have in place. It does what it says on the tin too; helps you to better manage your cash flow, making it less likely for you to have a negative cash flow. Creating a cash flow management strategy is easy if you make the time for it. Remember, you’re only going to get out what you put into it! Luckily we have you sorted with some help on creating one (like creating a cash flow forecast or adjusting for slower periods) with our article ‘Cash Flow Management Strategy Simply Explained for Your Small Business’.


Financial Solutions to Small Business Cash Flow Problems

Trying to grow and expand your business is next to impossible without a positive cash flow, never mind just trying to stay afloat! However, sometimes, despite your best efforts, your cash flow can become negative from something as necessary as updating your equipment. Find out how to help boost your cash flow in our article ‘Cash Flow Finance Solutions for Your Small Business’. For simply explained financial solutions to cash flow problems, check out our article on ‘3 Finance Options to Improve Your Small Business Cash Flow’.


Managing your cash flow and dealing with any problems that come up can be daunting as a small business owner, but it’s important to stay positive (even if your cash flow isn’t!) and do all you can to turn it around! While we hope this article has helped you to understand you business' cash flow better, it's also important to seek advice from peers or finance specialists. This will hopefully help you solve any cash flow issues you may be having. 


Tags: Cash Flow

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