Here are two cash flow management tools you can start using straight away, and tips from two small business owners about how they respond to cash flow dips.

Here’s a snapshot of the article’s insights:

• Get started on consolidating your business’s bottom line today with a cash flow forecast template and a profit and loss projection tool.
• Bookkeeper Trent Yesberg recommends keeping on top of the programs and tools that can help monitor cash flow – many are available for all businesses, regardless of industry.
• Photography business owner Myles Formby sets clear payment terms and sometimes asks for a 50% deposit up-front.
• “We … have an updated progress payment schedule for our building contracts to ensure that we have adequate cash flow throughout a project,” says building services business co-owner Bek Bishop.

Cash flow is front-of-mind for small business owners, with one in four small business owners saying cash flow and business demand are the number one concern facing them right now.* We’ve compiled information about cash flow management tools you can start using straight away, a bookkeeper’s tips, and insights from two small business owners about how they respond to dips in cash flow and encourage steady, long-term growth.

Cash flow management tools

Get started on your long-term cash flow management straight away with these easy-to-use tools.

Cash flow forecast template

A cash flow forecast is an indicator of the business’s future cash position. Among other things, it can help you to predict a cash shortage or surplus, and compare income and expenses for different periods. With its instant calculations, a cash flow forecast calculator can help you spot trends and tackle cash flow issues before they become a crisis – strengthening your business’s base as you approach the end of the year. Use the tool here.

Profit and loss projection tool

Not only can a profit and loss projection tool help you see how your business model is faring with a few quick expense calculations, it can also help you look to the future and develop projections, sales targets, and pricing for goods and services. Use the tool here.

Tips from a small business bookkeeper

“Talk with your suppliers if you need to extend payment terms. Everyone is more receptive when they are approached in advance.” There are three tenets to effective cash flow monitoring, according to Trent Yesberg, director of bookkeeping firm Regional Business Services in Townsville: budgeting, communication and technology. “Budgeting is so important,” says Trent. “It allows you to understand what you have to work with and to see the timing of payments. “As much as we would love our clients to pay on time, that is unfortunately not always the case. Using accounting software such as Quickbooks helps us manage this.” On the topic of communication, Trent suggests the following actions:

• “Send client invoices as soon as appropriate to ensure you receive your payments as soon as possible, and follow up with clients before their payments are due to ensure there is no confusion.”
• “Talk with your suppliers if you need to extend payment terms. Everyone is more receptive when they are approached in advance.”
• “Speak with your accountant about new capital requirements. They can assist with new or increased facilities.”

He also recommends keeping an eye on “ever-evolving” technology and programs. “Allowing your clients to pay you faster is easier now with online and mobile payments, and automatic reminders for invoices,” he explains. “Using Quickbooks’ cash flow planner tool is also a smart way to keep on top. “No matter what industry or business type you are, there is plenty of easy-to-use technology to assist your cash flow.”

Two business owners on managing cash flow

“If it's a very large job, I'll ask for a 50% deposit up-front. Especially if the job is a big chunk of your monthly income, it might be a while until you'll see anything come of it.” Myles Formby is the owner of photography business Photoform*, and takes the advice of Trent when outlining invoice conditions. “I set my invoices due on the day of delivery, or if I've been working with someone for a while they get seven days,” he says. “If it's a very large job, I'll ask for a 50% deposit up-front. Especially if the job is a big chunk of your monthly income, it might be a while until you'll see anything come of it. “If possible, try and take payment on the day of delivery of the service. Get a Square reader and make it clear to your clients you will be taking payment on the day.” For Bek Bishop, co-founder of Elite Building Solutions, managing cash flow involves accurate forecasting, and working around supplier and material availability owing to the nature of the industry. “We conduct a forecast for upcoming works and have an updated progress payment schedule for our building contracts to ensure that we have adequate cash flow throughout a project,” she explains. “We reverse-build our homes if necessary, depending on trade availability. We provide our forecasted works file to our suppliers to ensure that we have our materials and supplies ready when we need them.”

Further insights into cash flow management

If keeping track of revenue and expenses is proving tricky, consider hiring a professional to assist you in understanding the cash flow impacts that your business may face as the new financial year begins. Finally, available on the Prospa blog are all manner of insights from small business owners about how they’ve boosted cash flow for steady but sure growth. Read about how:

• Three small business owners protect their bottom line from rising costs
• Manly Bikes has grown with an all-in-one view of business cash flow
• Strengthening cash flow can help businesses adapt to the rising cost of living, and support their customers and clients in the process

Consider how their suggestions might be relevant for your business and inform future planning. *RFi Australia SME Banking Council, June 2023