Small business cash flow. 3 steps to stability | Willem Gous

Small business cash flow. 3 steps to stability

Small business cash flow. 3 steps to stability

Small business cash flow. 3 steps to stability

Fixing small business cash flow is not something you usually fix overnight. Also, telling you that you should fix it usually only leads to frustration because the people that tell you rarely give you the tools to fix it. In this short post, I will share what I did to fix my small business cash flow issues many years ago. It has worked well for me and I am sure it will work well for you too.

Small business cash flow solution #1: Bank your taxes

I am a VAT registered company in South Africa and have to pay my VAT every 2 months. I opened a call account where I put all my taxes on every invoice. That way I cannot spend the money and when tax time comes, I have it. I found previously I used to spend my tax money, that created a lot of crap in my life. This helps to avoid that.

Small business cash flow solution #2: Save 52 times

Saving money for a rainy day helps. I never had the money to save big every month. So instead I saved every week. I have automatic transfers to an external account NOT connected to any online banking. Why no online banking? So I cannot spend it.  I am not talking about thousands every week, I am talking a few hundred a week. That is all. Next thing you know you have 5,000, 10,000 or even 20,000 waiting and ready to save your behind in a tight crunch.

Small business cash flow solution #3: Get to know your accountant

Let your accountant, if you cannot do it yourself, draw up what lies ahead every week. What money you will need so that you can plan from Monday how and where you will make the money. This guides your to-do list and what types of conversations you have with customers.

Let your accountant do average analyses on your expenses. So if you spent X1,1 on an item you usually spend X amount on then it needs to be marked in red and discussed. This last step, once I applied this, my unplanned expenses disappeared in 6 months. I was on budget consistently from then on.