Skip to content

How To Ensure Your Small Business Avoids Cash Flow Catastrophes

Have you ever heard of a company’s cash flow being referred to as its “lifeblood”? That’s because it ensures that all bills are paid, employees are compensated and business growth is possible. As explained by the Business Development Bank of Canada, cash flow measures how much cash a company takes in versus how much it expends.

“More cash coming in than going out means the cash flow is positive,” explains their website, “If the opposite is true, the cash flow is negative. A business is considered healthy when its cash flow is positive for a prolonged period of time. Even profitable businesses, however, can experience short periods of negative cash flow.”

What can you do to ensure your small business avoids cash flow catastrophes?

Don’t sleep on sending out your invoices.

If you’re looking to negatively impact your company’s cash flow, then go ahead and forget to send out invoices promptly. As well, when you neglect to follow up on unpaid invoices, you’re only working to hurt your business. Make sure that you establish clear payment terms with your customers and clients. Don’t hesitate to send them reminders before their invoices become overdue. You may also wish to implement automated systems to streamline this process and ensure timely payments.

“By sending out invoices as soon as possible after the completion of a project or delivery of goods, your business stands the best chance of quick, or quicker payment,” says the UK’s Callan Accountancy, “Delayed invoicing will lead to delays in you receiving payment, which can impact cash flow and the financial stability of your company.”

Relax with all of those discounts.

We’re all for promoting your store with special discounts and promotions every now and again. But the last thing you want to do is undervalue your goods and services so that you’re hurting your bottom line. Be careful not to offer discounts and promotions too frequently or without careful consideration. Make sure they are strategically planned to maximize revenue without sacrificing profitability. Consider alternative strategies such as loyalty programs to incentivize repeat business.

“Discounts will do more to destroy your profits and your cash flow than anything else you do, warns Stephen King (we’re sure it’s not THAT Stephen King) of GrowthForce,  “Many people have the mindset of ‘I’d rather get the cash flow in the door’. This is not a long-term, sustainable solution. The top line change has such a profound impact on the bottom line, that even a small discount will hurt.”

Be careful not to overstock your inventory.

Make it a point to conduct regular inventory audits. Doing so will identify slow-moving or obsolete items so you can adjust your purchasing accordingly. Stocking excess inventory can tie up valuable capital that could be used elsewhere in your business.

“The carrying costs for these additional items tie up money that you could be investing more wisely into business growth opportunities,” stresses Edmonton’s Apero Solutions, “You could be bringing on new product lines, updating your technology, or starting marketing campaigns to support market share expansion and growth initiatives.”

For many years, Synergy Merchants’ unique merchant cash advance program has been helping business owners to maintain better cash flows. To learn all about how our program can help you to enhance your cash flow, please don’t hesitate to call us at 1-877-718-2026 or email us at You can also apply online for a free, no obligation quote!

Back To Top