Managing Cash Flow For SME’s and Startups

A good cash flow management understands every inflow and outflow of cash. Most of the startup failures occur because of cash flow problems in the business. It is important for every startup to keep an eye on cash, so they can easily sustain and grow the business.

A good cash flow management is essential to keep a new business option rolling with handling expenses, poor credit control, negotiating deals and forecasting.


Control your expenses according to your business. Here is a list to keep your cash flow positive to assure sufficient cash comes up when you need it.

  • – Make cash flow your priority
  • – Make sales forecast
  • – Control the cost for effective cash flow
  • – Credit control and much more

Here are some useful tips to manage cash flow for small businesses and SME’s effectively:

Fluctuating Revenue

When the customers are not completely aware of the product, that results in the unpredictable level of sale. Thus the amount of the inventory that one has to keep to maintain the level of sales is higher than optimum.

The position of the business depends on the cash flow. One has to ensure that there is the constant flow of revenue for the startup to manage a healthy level of cash.

Return On Cash Invested in Marketing

Every startup is looking to spread product awareness and acceptance. The initial expenditure on marketing and promotions depends on the expected return on the invested capital is relatively less.

It is a huge risk, so one has to be careful while pumping in cash, in the marketing activities.

The return tracked for each activity has to be optimized with the right level of cash flow.

Related Post: Digital Agencies: How To Keep A Healthy Cash Flow


Late Paying Clients

As a startup, the business is looking for more and more clients. There is a constant tradeoff, between having more number of clients and having a limited number of clients who always pay on time.

This adds to the struggle for a startup business looking to generate revenue, while also generating more cash.

Related Post: Tips To Keep Your Business Finances In Order

Improper Forecasting

Many times, startups find it hard to forecast the revenue and expenses as precisely as required.

Unforeseen expenses and lack of judicious spending are the key reasons behind cash flow problems that businesses face, oftentimes.

Expenses must be documented and past expenses must be analyzed well, to control futures ones.


Investments and Expansion

This becomes a major reason for a cash flow crunch for startups. As a business owner, one is tempted to add to the line of products and services.

This calls for increased investment in manpower and resources. One has to be vigilant with each level of investment so that the cash flow can be managed effectively and as required.

Planning The Free Trials

The free trials in a startup must be strategized in an effective manner to ensure that the customers are also opting for the paid subscriptions.

Many a times startups fall into the trap of too many free trials, resulting in a cash crunch for the business.

Online Payments

Every client is looking for a simplified method of payments so the payments can be made faster.

A startup must use an online invoicing solution that provides the appropriate payment integration so the client can make the payments easily and effectively.

Sending of Invoices in a Timely Manner

Many businesses don’t end up taking the invoicing process seriously. This can lead to severe cash flow problems.

If the invoices are sent out late, they reach the client late and this leads to late payments.

On the other hand, if the invoices have errors on them, it becomes difficult for them to be processed in timely manners.

Every business must take the invoicing process seriously, to the cash flow of the business, on track.

Choosing an online invoicing solution like Invoicera is crucial to effective management of business cash flow. Here are some of the key features of Invoicera that are extremely useful:

  • – Add a late fee to invoices and get the client to pay on time
  • – Automatic payment reminders
  • – Inventory management and optimization
  • – Expense management and control
  • – Invoice scheduling
  • – Online payments
  • – Error free and professional business invoicing

Also, know more about the importance of cash-flow for business.


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