- You’ll learn how to:
- Understand the difference between cash flow and profit
- Spot early signs of cash flow issues
- Monitor small business cash flow with simple tools
- Calculate key cash flow figures without complicated software
Even the strongest small businesses face periods of pressure — whether it’s late customer payments, rising costs, or a slowdown in sales. Managing cash flow effectively during these times can mean the difference between surviving and thriving.
This guide gives you simple, practical steps to protect your cash flow, make smart decisions, and stay in control — even when conditions are challenging.
1. Build a Short-Term Cash Plan
When cash is tight, a 30-day cash flow plan is your best friend. List your expected income and essential expenses, and highlight any gaps.
Quick tips:
- Identify critical payments (rent, wages, suppliers)
- Forecast expected incoming payments from clients
- Mark the dates when funds are due, and prioritise accordingly
- Update the plan weekly to stay on top of changes
A short-term plan helps you see exactly where your working capital is going and prevents surprises.
2. Prioritise Essential Spending
Not all costs are equal. Focus on the expenses that keep your business running and can generate revenue.
Focus on:
- Staff and critical operations
- Core suppliers
- High-priority invoices that affect revenue generation
Reduce or defer:
- Non-essential subscriptions or overheads
- Optional marketing campaigns (temporarily)
- Luxury purchases that aren’t immediately necessary
3. Manage Receivables Proactively
Late payments are one of the biggest cash flow problems for small businesses. Take action early to keep money flowing.
Steps to consider:
- Send invoices promptly and follow up politely but firmly
- Offer early payment discounts for clients if feasible
- Use reminders and set clear payment terms
- Negotiate payment schedules with larger clients if needed
4. Communicate With Suppliers
Suppliers understand that businesses sometimes face challenges. Open communication can give you breathing room.
Tips:
- Negotiate extended payment terms
- Ask for temporary discounts or flexible arrangements
- Maintain transparency — suppliers are more likely to help if they understand your situation
5. Explore Flexible Funding Options
When working capital is tight, external funding can help bridge cash flow gaps. Short-term funding solutions can provide the flexibility needed to pay bills, invest in opportunities, or manage seasonal fluctuations.
Capify offers business funding designed for small businesses to support cash flow during tough periods. Options include:
- Short-term loans
- Working capital funding
- Flexible repayment schedules
6. Monitor Your Cash Flow Closely
During challenging periods, monitoring becomes more important than ever. Track your cash flow daily or weekly to avoid surprises and make better decisions.
What to monitor:
- Cash inflows and outflows
- Accounts receivable aging
- Key upcoming payments
- Changes in client demand or seasonal trends
Using simple tools or spreadsheets can help you maintain visibility without spending hours on accounting.
7. Keep a Positive Mindset
Tough times are temporary, and effective cash flow management gives you control. Focus on what you can manage, take proactive steps, and use the period to strengthen your business processes.
Remember: Small, consistent actions now can prevent bigger problems later — and even create opportunities for growth when conditions improve.
