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Controlling your Business Cashflow

Controlling Cash Flow Management in Your Business

The key to your business success isn’t having a dozen revenue streams or one killer product or service. Although these can help, the real success factor is cash flow management.

Understanding the basics, knowing the benefits, and having implementable strategies are important steps to take to effectively manage your business's cash flow.

What is Cash Flow Management?

Cash flow management follows the money going in and coming out of your bank accounts. This helps you maintain a steady operating balance and reduces the risk of not being able to meet your upcoming obligations. Cash flow management involves monitoring, analyzing, and optimizing procedures surrounding the chequing account.

What are the Benefits of Maintaining Strong Cash Flow Management?

Cash flow management comes with many benefits for business owners, with little to no costs associated with strategy implementation. Among the list of benefits include:

Pay Employees and Vendors Timely

Timely payments to your employees and vendors are critical to building strong relationships. Vendors are less likely to give you favourable discounts on orders when you are frequently late on payments. Additionally, employees are more likely to search for alternative employment opportunities when their pay schedule is inconsistent. Keeping talent is an issue plaguing many business owners, making it critical to prioritize timely payments with strong cash flow management procedures.

Plan for Large Purchases

There are always ways to increase efficiency and productivity within your business; sometimes, this is a new piece of machinery or adding on another employee to free up additional capacity.  Planning your cash requirements will allow you to better plan for an injection of capital or obtain favourable terms on debt. As a critical point, I would always recommend that long-term debt be used for long-term assets; try and minimize the use of your working capital or line of credit as those should be used for day-to-day operations.

Minimize Overdrafts

Who likes to run out of money? Most business owners and managers agree that this is a less-than-ideal situation when running a business. Overdrawing your business bank account leads to fees, interest and returned cheques, which takes away from your profit and reputation. By implementing effective cash flow management, you can increase profitability while maintaining a steady cash balance.

Business Growth

Growing your business takes due diligence, effort, and cash flow management. Transparent insight into the cash flowing in and out of your business allows you to make more informed decisions that promote growth, such as conserving cash when purchasing new equipment or speeding up vendor payments to take advantage of early payment discounts.

Peace of Mind

What is one of the main stressors of running a business? Money. Not worrying about being late on payments and running out of cash can take a major burden off your back. Honing in your stress levels leads to a positive outlook in your business, which can be passed down to your employees and customers.

What Strategies Improve Cash Flow Management?

Realizing the different benefits of cash flow management can be done by implementing various strategies, including:

Frequent Data Entry

Good data in equals good data out. You want to be sure you are entering data regularly. For business owners with higher transaction levels, daily bookkeeping might be needed; however, small to medium-sized businesses can get away with entering data once a week.

The more frequently you enter data, the greater the ability to pull financial reports on a whim. Pulling a report that you are making a business decision based off isn’t suggested if you are missing a week or two of data, as this can dramatically change the output.

Monthly Reconciliations

One of the key strategies for improving cash flow management is to engage in monthly reconciliations of all bank and credit card accounts. This not only deters the risk of fraud, but it also matches your accounting records with what the bank has processed. Uncovering mistakes timely leads to a greater ability to fix the errors.

Regular Report Analysis

Cash flow management focuses on what you do with the information you see. Looking over the financial reports is great, but what does it tell you? Are you generating a positive or negative cash flow? Where can you improve? There are all questions you need to ask yourself when reviewing the reports.

Many business owners see success from reviewing the income statement, balance sheet, cash flow, accounts receivable aging, and accounts payable aging reports. Remember that the reports most beneficial for your business depend on your industry and operating goals.

Consult with an Expert

When all else fails, consult with an expert. Often, we will see areas of improvement you may miss, and having a professional to discuss plans with can help move things into action.

A professional can help you plan and implement a cash flow strategy to help you leverage and achieve a specific operational or financial goal.


Controlling the cash flow management in your business may seem like an overwhelming task. However, taking it one step at a time makes achieving effective cash flow management doable, even for novice business owners.

I’ve seen business owners successfully scale their businesses by focusing on viable cash flow management strategies, but I’ve also seen businesses fail from lack of implementation. Which business owner will you be?

As I mentioned, consulting with an expert can get you on the right path. As a CPA doubling as a business consultant, I would be happy to work through these issues with you to uncover the right moves for your business.

This article was originally posted on LinkedIn on October 27, 2022 - see link here