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As an entrepreneur, cash flow management might be the number one thing that keeps you up at night. There is a multitude of income and expenses that can be overwhelming to manage. In any given month, you might face one or more of the following:

  • Funding payroll
  • Sales tax due
  • Estimated payments on income taxes due
  • Large customers still haven’t paid their invoice

So if any the above sounds like a situation you have been in, what on earth should you do? Well, there are several things you can do, but there’s a catch as they all require you to have done something preventative before a month like this comes along in the first place.

Here are five practical things you can do now to help you manage your small business cash flow, so in the months ahead, so you are not taken by surprise.

1. Pay Later and Collect Earlier

This is the first principle of cash flow management.

If you can negotiate to set the terms on your bills to be due later, while at the same time collecting on your invoices at the time of service, then you have already created a cash flow cushion that you can rest on should you have a rough month.

One method to pay bills later is to create payment tiers for your vendors so you can understand your expenditures better. If you know which vendors are more flexible, then you’ll want to make sure and delay payment to them in a cash crunch. If you identify a vendor relationship as essential, then you’ll want to make sure they are paid on time, every time.

Warning: Do not let that cash cushion you created trick you into thinking you have extra cash on hand to spend.

2. Outsource Your Payroll

Funding payroll each pay period can certainly be a large cash withdrawal. On top of that, if you are paying your taxes on a quarterly basis, then you all of a sudden have a large liability you have to track at the end of each quarter.

To better manage your cash flow, consider outsourcing your payroll to a professional firm that withdraws the funds all at once so you don’t have outstanding liabilities to plan for. This forces you to be wiser with your cash and doesn’t allow you to spend that extra money, that you don’t really have, on other things before your payroll taxes are due.

Even more importantly, investing in a payroll service simplifies your cash flow. So when you or a professional goes to forecast your cash, the payroll is super easy to project.

3.  Create a Good Relationship With Your Banker

Right now is a great time to go out and talk with a small business banker and ask him what you need to do to establish a line of credit. He’ll likely ask for financial statements and tax returns over the past few years. If providing financial information to bankers frightens you, then now is a good time to make plans to get your books and taxes in order.

Have a professional prepare your tax returns and look over your books. The money it costs to get your finances accurate now and securing that credit line, will be well worth the cash flow security and your peace of mind in the long run.

4. Create a Basic Cash Flow Forecast

No one knows your business better than you. You know seasonality, collection rates, and vendors that need to be paid. Whether you hire someone to do this for you, or you do it yourself, make sure and put together a basic cash flow forecast.

Project out the year and plan for large expenses and see how your cash position turns out. If you have a basic plan, then you can take steps now to prevent cash flow issues down the road.


Despite it’s importance, most small business owners don’t spend the time to actually do this. Why? Because it kind of sucks. Let’s face it, as an entrepreneur you want to imagine sales exceeding expectations and flying through the roof. Making a real projection of cash flow doesn’t sound appealing, and it brings you down to earth.

It will be worth spending a few hundred dollars up front to see your year in a holistic perspective so you can plan ahead for the lows, especially if your business may suffer from poor cash management.

5. Evaluate Your A/P and A/R Systems

This one might sound like it doesn’t fit, but hear me out.

New cloud accounting apps, like and, that allow clients to collect payments online are reporting a much faster collection rate on accounts receivable.

Depending on your industry, you might have a cash flow issue simply because the accounting system you are currently using to invoice your customers does not make it easy for your them to actually pay you. The easier you make it for your customers to pay, the faster you get paid.

On the A/P (accounts payable) side there are systems, such as, that can schedule payments out into the future. So when you have a list of 10 bills to be paid, you can go into the system and schedule them to all be paid on the due date in just a few clicks.

This makes it much easier to project your cash flow, and you don’t have to return to writing checks, or make a payment every time a bill is due.


Managing cash flow can sometimes be a taxing and difficult experience.

Using the five tips above will allow you to place some of the burden on others, so you don’t have to shoulder it all yourself. Take some time and arm yourself with information about the new cloud accounting systems that can help you do the job with ease.

Take a few steps now to make sure that your 2015 cash flow, flows much smoother.