What is cashflow and how to manage it

Cash flow might not sound exciting, but it’s the lifeblood of your business. Put simply, it’s the money that comes in and goes out of your business over a set period. When more is coming in than going out, you’ve got positive cash flow. When the opposite happens, you’re in negative territory.

Cash flow determines whether you can pay your rent, staff, and suppliers on time. Without it, day-to-day operations can grind to a halt. Profit looks great on paper, but if you don’t have the cash in hand, you might still struggle.

For example, imagine you’ve just landed a big client. Fantastic news – but if they take 60 days to pay, how do you cover wages and stock in the meantime? That’s where smart cash flow management steps in.

Managing cash flow isn’t about being an accountant – it’s about giving your business the best chance of staying steady through the ups and downs. Here are some practical steps:

• Create a cash flow forecast: Map out expected income and expenses over the next three to six months. Spotting gaps early gives you time to act.
• Get invoices paid faster: Clear payment terms, prompt invoicing, and gentle reminders all help to reduce delays.
• Separate essentials from extras: Prioritise what keeps the business running – wages, rent, bills – over the nice-to-haves.
• Build a buffer: Having even one month’s worth of costs in reserve can make all the difference during uncertain times.
• Review spending: Renting equipment instead of buying outright, or renegotiating with suppliers, can free up working capital.

It might sound counterintuitive, but rapid growth can strain cash flow. More sales often mean more stock, bigger orders, and higher costs before the cash actually arrives. Staying on top of forecasts and having funding options ready keeps growth sustainable rather than stressful.

Sometimes, even the best planning can’t prevent a cash crunch. The important thing is not to ignore it. Speak to your suppliers, chase debtors, and explore funding options before it becomes urgent.

That’s where a business loan can help. The right finance can bridge a gap in cash flow, keep your plans on track, and give you breathing room to focus on growth.

Cash flow is about more than numbers on a spreadsheet – it’s about giving your business the flexibility to adapt, grow, and weather change. Stay on top of it, plan ahead, and don’t be afraid to explore support when you need it. Think a business loan could help?

Apply today.