7 Steps for Improving Small Business Cash Flow

(By Erika Napoletano)

It’s easy to blame our customers or clients for not paying us on time. So easy, in fact, that we ignore the reasons we can’t access the cash we need, when we need it. When my clients weren’t paying me on time, I knew there was only one fix for my cash flow: putting structure in place to ensure I was running my small business like a business. I was the only reason this hadn’t happened, and I was the only person who was going to be able to fix it.

It’s time to get out of your own way and improve your cash flow. These 7 easy-to-implement practices will show you the money.

When you’re running into problems with cash flow for your small business, one thing is certain: It’s not a problem with your customers. It’s a problem with you and how you’re handling your business finances.

I sat down late last year and decided that my business was never going to have a cash flow problem again. It was time for me to get out of my own way. Since that time, the results have been astonishing. Here are the 7 no-brainer moves I made to improve the cash flow for my small business. They’re all moves I wish I’d made sooner.

Admitting You’re the Problem

It’s easy to blame our customers or clients for not paying us on time. So easy, in fact, that we ignore the reasons we can’t access the cash we need, when we need it. When my clients weren’t paying me on time, I knew there was only one fix for my cash flow: putting structure in place to ensure I was running my small business like a business. I was the only reason this hadn’t happened, and I was the only person who was going to be able to fix it.

Creating Structure

I’d had an online invoicing program for over three years, but what I hadn’t been great at is treating the business side of my business with equal importance. It’s easy to get sucked into the work and ignore getting paid for the work. Here are three ways I created a financial infrastructure for my day-to-day business activities. They’ve all drastically improved my cash flow.

  • Commencement Deposits: Depending on the service, I charge anywhere from 50 to 100 percent of the project fee to get on my calendar. My customers have never complained and it demonstrates goodwill from both sides—I’m ready to start for those customers ready to pay.

  • Invoicing Practices: When I deliver the final component of a project, I invoice immediately. Not once a week, not once a month—when something is delivered. We have to pay for most everything else in life when we purchase it or take delivery—why do we treat the services we provide for others differently? I also set up recurring invoicing for retainer clients. I don’t have to do anything—the invoices are sent to my clients automatically.

  • Weekly Status: Every Friday at 11 a.m., I open my invoicing dashboard and review what’s paid, what’s pending and what might be late. I end my week smiling at what’s dealt with and still smiling knowing that I’ve followed up on all my loose ends.

The Beauty of an Arm’s Distance

My personal and business bank accounts used to be at the same bank. On January 1, 2013, that changed. With my business and personal accounts now completely segregated, I have even more incentive to keep up with my invoicing. If I don’t, I can’t run payroll and I won’t see any money in my personal bank account when I want to take that weekend trip to the mountains. Talk to your CPA about payroll options for your small business. Cash flow is a breeze since my own CPA made the  recommendation to move my business account, and I know my taxes, health insurance, retirement savings and other deductions are automatically dealt with. Arm’s distance? I’m loving the distance.

Getting Help

Speaking of a CPA—get one. I also got a bookkeeper. While I was able to take care of my business’s finances, none of it jazzed me. Now I have a bookkeeper I pay about $100 per month to keep my business finances in line (and he’s jazzed about this). He talks to my CPA (also jazzed about dealing with my business finances), who’s charged with keeping my taxes paid and offering advice on the most favorable strategies for my revenue levels, annual sales and growth goals. My CPA has also given me invaluable advice on Health Savings Accounts (HSA) and retirement plans for small businesses like mine. Now contributions to both my HSA and SEP IRA (self-employed IRA) are automatically deducted from my bank accounts, eradicating two more excuses from my small-business lexicon.

Embracing Resources

Having used the same online invoicing solution for over three years (a fantastic service called Harvest), my sales volume has increased to a point where I needed a more robust solution. I also wanted one that left Paypal out of the equation, as I was tired of getting paid and then having to manually initiate a transfer to my bank account. I personally opted to switch to PaySimple (full disclosure: it’s a client of mine), as it was the right solution for my transaction volume, how my clients prefer to pay (checks and credit cards), and sent all payments direct to my bank with no middleman. You can also check out online invoicing and payment solutions from FreshBooks and WePay.

Eradicating the Headaches

Some clients will never (ever) pay on time. Knowing this, I was faced with two choices: get rid of the slow paying ones or make it worth my while for them to pay in their own sweet time.

Given that I truly love working with all my clients (I’d already long ago purged the ones who were more headache and less awesome), I established early pay discounts and late payment penalties. Now I’m offering a reward for those slow-to-pay clients that step to the plate and pay early. I’m also getting paid for waiting when they go beyond our agreed upon payment terms. Either way, I get paid. And now I’m getting paid early more often than not.

Be Willing (Because You’re Ready and Able)

Remember that phrase “ready, willing, and able”? When it came to cash flow in my small yet rapidly growing business, I was ready and able. The willing part needed some work. I knew how it felt to have my business finances all willy-nilly, wondering where all the money from my growing business was really going. Today, I know down to the penny.

Once I was willing to make the change, money started landing in the bank and flowing effortlessly where I needed it to go: bills, contractors, expenses, payroll, savings, healthcare, retirement. Being willing made it possible to enjoy owning a small business. That’s a welcome change after six years of being ready and able to make my cash flow worries a thing of the past. And yes, I called these 7 tips “no- brainers”—but before I implemented them, they were anything but. Here’s to combining ready, willing, and able and putting these no-brainers to work for your business.

(Source: Openforum)

“Opinion pieces of this sort published on RISE Networks are those of the original authors and do not in anyway represent the thoughts, beliefs and ideas of RISE Networks.”


"Nigeria's Leading Private Sector and Donor funded Social Enterprise with deliberate interest in Technology and its relevance to Youth and Education Development across Africa. Our Strategic focus is on vital human capital Development issues and their relationship to economic growth and democratic consolidation." Twitter: @risenetworks || Facebook - RISE GROUP || Google Plus - Rise Networks

19 thoughts on “7 Steps for Improving Small Business Cash Flow

  • July 24, 2013 at 12:26 pm

    Way cool! Some extremely valіԁ pointѕ!
    I appreciаte you wrіtіng this post and also the
    rest οf the wеbѕіte is also rеally gοod.

  • August 16, 2013 at 2:51 am

    Hello, yeah this post is really nice and I have learned
    lot of things from it regarding blogging. thanks.

  • August 21, 2013 at 12:16 am

    Hello, constantly i used to check weblog posts here in the
    early hours in the daylight, as i enjoy to find out more and

  • August 22, 2013 at 11:10 pm

    After lοoking over a number of the аrtісles οn your site, I truly likе your way
    of writing a blοg. I saved аs a favorіte
    it to mу bookmаrκ webpage lіst and
    will bе checκing back in thе nеar future.
    Рleaѕe viѕit my web sіtе too anԁ let me know
    what you think.

  • September 2, 2013 at 12:09 pm

    Good blog you have got here.. It’ѕ diffіcult to find gοod quality writing like yours nоwаdays.
    I honestly аppreciate pеoрle liκe
    you! Takе carе!!

  • September 16, 2013 at 5:49 pm

    I’ve been surfing on-line more than three hours nowadays,
    but I by no means discovered any interesting article like yours.
    It is pretty price enough for me. Personally, if all website owners and bloggers made good content material as
    you did, the internet will likely be much more useful than ever before.

  • September 27, 2013 at 1:36 am

    Thanks designed for sharing such a good thinking, piece of writing is good, thats why i have read it fully

  • September 27, 2013 at 7:40 pm

    This is a really good tip especially to those new to
    the blogosphere. Brief but very precise information… Appreciate your sharing
    this one. A must read article!

  • October 1, 2013 at 9:59 pm

    Everything is very open with a precise explanation of
    the challenges. It was definitely informative.
    Your site is very helpful. Thank you for sharing!

  • October 18, 2013 at 7:51 am

    It’s an amazing post in favor of all the web users; they will benefit from it I am sure!!

  • October 28, 2013 at 3:21 am

    Great post, I am impressed!
    Extremely helpful information especially the aspect… I care for
    such information a lot. I have been seeking for this particular information for a
    very long time. Thank you and best of luck.

  • November 5, 2013 at 8:36 am

    Hello there! Do you use Twitter? I’d like to follow you if that would be okay.
    I’m definitely enjoying your blog and look forward to new posts.

  • November 7, 2013 at 4:14 am

    Hi to every one, it’s genuinely a fastidious for me
    to pay a visit this web site, it includes valuable Information.


Leave a Reply

Your email address will not be published. Required fields are marked *