Tips on how a small business can improve Cashflow

urlCash flow is the blood of small business. Without it, you go out of business. It doesn’t matter how good you are, how great your products are and even how great your customers and staff are. Cash flow is the essential item to staying in business.

So your business is cash poor and you need to know how to survive. Here are the rules that I have been able to use in bad times and to keep my business operational through thick and thin for 30 years.

  • Weed out your clients. 10% of your clients bring you 90% of your profits. Look after the 10% very well. Get more of them. Encourage the 90% of time wasteful clients to either go to other suppliers or become part of the 10%, so you can get more of the 10% clients. When all your clients are bringing you good profit, you won’t have a cash flow problem. Plus you will be able to ride the loss of a good client or a depression.
  • Don’t offer more than you really can. If you need to have 7 day terms, then state it. Think outside the box. For example, you are a hair dresser and you notice you clients are either being lost or not coming as often. Their reason – their disposable cash is less than ever before. Well you need to help them to help you. Offer a weekly payment that means that each week, they pay $X towards their regular hair appointment. End result, they have a solution to their limited disposable income. You have a regular cash flow and client. Everyone wins. So think outside the box.
  • Don’t forget to ask for payment. So often, people have huge trade debtors and poor cash flow. If they asked for payment, then the cash flow would be resolved. As an example, one of my clients (a local Government Body) – who are average with payment terms, if followed – I decided not to follow up the payment. This invoice took over 5 months to be paid and was lost over 4 times. So follow up your payments.
  • Don’t be afraid to lessen your account terms. E.g. from 30 days to 7 days, with the odd formal exception. If you look around – all of our facilities have changed account terms to 7 days. This goes for phones, power, water and credit card payments. Some are even less.


  • Lower your costs. Look hard at what you spend money on, and lower your outgoings. This can be as simple as shopping around, to cancelling some not really needed items. Or even considering different forms of services, e.g. Virtual Assistants.
  • Never stop giving back. I have found that volunteering and supporting the community has an odd way of coming back and supporting you. If you give, you do seem to get. It may be by a new client, or a referral, or purely it gives you the positive feeling when things feel bad.
  • Finally – Keep Control. Don’t just hope it will get better on its own. Face it, plan and execute. Don’t waste energy on worrying. Face the facts – look at the best and the worst.
  1. Plan for what you want.
  2. Expect to achieve what you want.
  3. Execute your plan.

It never fails, and if you get another stone on your path, go back to face facts again. Even if the fact is closing the business as it is. It does not mean you are out of business, it just may mean you are going to do business in a different way.

I also found it helpful to have someone to chat to, that understands, listens and when asked, can give you useful honest feedback. In the end though, you have to decide and act.

I hope these points have given you some ideas. Remember, after the hard times come the good times. Work through a bad cash flow and you have a winning solution to keep on getting bigger and better.


Cate Schafing is a successful Australian business woman in the IT field serving as CEO of Accede Holdings Pty. Ltd. makers of Ezymeetz, ICE and Virtual Gym. She develops innovative new technological products as a programmer and entrepreneur. In gratitude for her success her company supports NFP’s by donating $5000 per month in programming time for NFP’s requesting work.


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