4 easy steps to managing your cash flow like a champ!

4 easy steps to managing your cash flow like a champ!

Managing cash flow can be one of the most challenging aspects of running a small business. Controller onDemand recently started working with a small business who was struggling immensely with this task. On most occasions they could not meet payroll and had to delay it a few days or even up to a week. COD came to the rescue. After instituting a cash flow management plan immediately their payroll has been paid on time, every time.


“Never take your eyes off the cash flow because it is the lifeblood of your business” — Richard Branson.


Here are 4 easy steps to managing cash flow.

  1. Pay your bills one day per week. Look at what is due and pay accordingly based on what your cash allows you to pay. Containing bill payment to 1 day per week lets you look at the whole picture objectively and see what is most important.
  2. Open a line of credit. If you have payroll you should have a line of credit. I recommend that any business who has payroll has a line of credit as a backup. One thing you must always pay is your payroll. You cannot miss payroll.
  3. Keep some cash in reserves. If you do not have a line of credit as a backup to cover your payroll demands, make sure you keep some cash in reserves after paying your bills to be able to meet your following week payroll demands.
  4. Look at your receivables. Can you nudge anyone who is past due to pay their outstanding invoice? Gentle reminders and/or statements can sometimes bring in more cash. Also review customer paying habits to predict what checks/payments will arrive next week.

Or let Controller onDemand create a cash flow plan for your company.

Do you know your business’ financial story?

Do you know your business’ financial story?

Believe it or not, many owners do not know their financial story. Often they depend on their bank account balance as their only means of determining where their business stands. This is unfortunate because so many answers to how the business is doing and where it is headed can be found in your financial story by looking at financial reports regularly. In fact, a business that looks at their financials monthly will be 80% more successful than those who only review them annually.

Let’s start with this… Do you know what segment of your business is most profitable? It may NOT be the one that brings in the most revenue. If you are not looking at your business by segment or by job and analyzing for profitability, you could be in for a surprise. Some call it job costing, others call it ABC (Activity Based Costing). Whatever you call it, it TELLS YOUR STORY. If you are not doing it, you could be wasting thousands of dollars and/or lots of manpower on a part of your business that is not profitable.

“You are never too old to set another goal or dream a new dream” — C.S. Lewis

There are so many items you should be reviewing your financial reports to understand your business’s financial story. Is your financial story a fairy tale, comedy, drama or horror story? Or worse yet, a mystery because you are unaware of what your story is?

Take the time to figure it out. And if it’s not a fairy tale yet, contact me and let’s talk about formulating a plan to rewrite it.

Do you have an achievable sales plan (in writing)

Do you have an achievable sales plan (in writing)

Why you should set sales goals

More than likely, locked away in your mind, you have some sales goals of what you want to achieve in your business. Those numbers may be even more top of mind as you look back over the past year and survey what you did – or did not – accomplish.

The New Year just weeks away, are those numbers going to stay locked in your head? Or… is this the year you get serious about making them happen? The following steps will guide you in setting a healthy sales goal for your business.

First step

Do you know what the first step is? Write your sales goals down!

You need a written plan. And no, scribbled on a napkin or post-it somewhere does not count.

I recommend to my clients that they create a 5-year plan. That might sound daunting if you have never written a plan before, but a five year view has real value. It forces you to look at where the company is and where you want to take it. Think short term and long term goals. Your goals over the next 5 years should be a bit of a “stretch” – set just outside your comfort zone.

Once you have the goals in view, start writing down the actions needed to get there. I know, more homework, but it’s important because without action, goals are nothing more than daydreams.

Take Action

Action Examples might be:

  • more marketing (or start marketing)
  • expanding or limiting your services
  • replace or upgrade equipment
  • create better processes
  • hire more staff
  • a combo of some/all of these examples

Next step, focus on the first year.

Use your yearly goal to split into smaller monthly goals that make sense for your particular situation. Do you have a seasonal business? Do you have a “gorilla” client that needs to be addressed? Do you need to network more? Does your staff need more training? Is there a trend in the marketplace that poses an opportunity or challenge? Take factors like these into account when setting up your monthly benchmarks.

Controller-OnDemand TIP!:

“It’s best to create a bar chart in Excel (like the ones you see for fundraisers) with one column the goal and the other column the year to date sales. It gives everyone a visual of where you are and where you need to go.


Third step…

Then repeat this exercise for the next 4 years. Granted, these goals and actions are subject to change. The purpose of planning for the future is to give you a baseline by which to track your progress towards that bigger 5-year goal.

Recap steps 1 -3

Why should you commit to paper?

It creates accountability. Simple – when you write out your plan you have made the goal visible and tangible.

It creates a vision. Plan for five years at a time. It keeps you focused short-term and long term.

It creates measurable progress. Monthly reviews are crucial. It’s how you know what impact your actions are having on the bottom line.

Final step…

After you complete steps 1 – 3, it’s important to put your goal for this coming year somewhere you will see it often – like every day. If you have employees, put it where they can see it, too. They are part of the plan after all.