Cash Flow – “Cash is King”

Business Solutions

Ever heard the term “Cash is King”? People often say it in business because the lack of available cash can cripple a business. Ideally, as a small business, you want to have 3 to 6 months’ worth of operating costs as available cash to ensure that when issues arise you can survive them. It’s not uncommon to be told you have a profitable business but to be struggling with cash flow.

If you are struggling with cash flow, here are 5 areas you can review in your business to make a start on rectifying it:

Accounts Receivable:

Issues in accounts receivable(money owed to you) arise for a couple of reasons, either products and services are not being invoiced out in a timely fashion or clients with overdue invoices are being contacted. Both of these have a negative cash flow impact by you not having money in the bank. Here are 3 points to make non-negotiable today, that will help you with cash flow, if they are currently an issue:

  • Invoice out your products and services in a timely manner.
  • Follow up on overdue clients and hold them accountable to a payment deadline.
  • Write off overdue amounts that won’t be paid, so as not to pay tax on the amount.

Accounts Payable:

In accounts payable(money you owe) there are 3 basic reasons people have cash flow issues; paying too early, paying too late and occurring extra charges. If you have an issue in this, here are 3 points you can focus on:

  • Don’t pay your amounts owing until close to or on the due date(allowing for bank transfer times so as not to be late). The exception to this is if you get early payment perks such as a discount.
  • Don’t get caught out with late payment fees.
  • Avoid credit card surcharges.


Expenses always seem to have a way of rising to meet the revenue increase in your business. Always remember when you spend $1 you need to sell $5 to make that money back(depending on your Net GP%). Below is 3 areas to go to first to sensibly reduce your expenses:

  • Can you negotiate the cost of your rent, insurance, phone, internet and other services?
  • Cancel any unused subscriptions.
  • Review anything that isn’t either getting you a new client or keeping a client. These have the highest potential to be unnecessary and removed as required.


Buying too much inventory not only ties up your money it also leads to discounts, wastage and writes off. It can be a challenge to this right but you do need to keep working on it. Here are 3 points to get you started:

  • Review your stock holdings vs the delivery turnaround time and action dead stock.
  • Buy at a discount, you make your money when you buy!
  • Don’t just place the same order as last time because you are busy! Especially when dealing with perishables.


You may have heard the saying “sales fixes everything”, this is most true unless acquiring the sale has an increasing cost. Generating more revenue will help you with cash follow, here are 3 ways to get you started:

  • Reactivate clients who haven’t spent in the last 3 months.
  • Do you have a big-ticket sale product/service?
  • Do you have an upsell, down-sell, cross-sell and addons?

Even if you haven’t had cash flow issues, go revisit these areas. You will be pleasantly surprised by the outcomes if you take action.

Can’t find any improvements in these areas and need help? Reach out to us today and book a discovery session.

Written by

Michael Clift

Founder|Business Coach

Venture Cultivation Coaching