Xero Accounting Gold Champion Partner
We hope you enjoy reading the blog post.
If you want our team to do your accounting or tax for you click here.

Cash Flow -8 Steps to avoid the small business reaper


Almost 50% of small businesses list cash flow as their biggest source of stress and virtually 80% of those that fail, do so because of cash flow.
But cash flow management shouldn’t be this scary…

Here are our 8 steps to avoid cash flow problems for your small business…


Find an Accountant

So many business owners try and save money by doing their own bookkeeping, instead of appointing an Accountant to do this. Apart from the risk of not doing it correctly – which is a different conversation for another day -, Accountants do way more than merely bookkeeping! The right accountant can advise on strategic decision-making, help with cash flow planning and forecast your tax exposure. The right accountant has become an indispensable business advisor that helps you grow and your business flourish.

The visibility your Accountant provides into your business finances might highlight certain patterns or behaviors that could put your cash flow at risk. This just might prove essential to you better managing and understanding your cash flow.


Forecast your cash flow

There is an age-old saying – “forewarned is forearmed”. In light of the fact that none of us has a crystal ball to see into the future, we have to rely on the next best thing…a forecast! Harriet Phimister of Float Forecasting points out that “Forecasting your future bank balance allows you to see when you may have a cash shortage that could cripple your business by stopping you from paying your staff, your debtors or yourself – and it gives you enough time to do something about it.”


Automatically collect payments

Xero recently conducted research that indicated that only one in every nine invoices sent, actually gets paid on time. Yikes! Your customer will come up with a million excuses why it is justified to delay payment, ranging from misplacing the invoice, to not receiving the invoice at all…we’ve all heard those excuses before, right?

Why not set up a system through which you can automatically collect payments? The beauty of this is that it formalizes both you and your customers’ cash flow as you will know how much and by when you will be receiving payment. Never having to chase payment again.


Set up a payment policy

In some cases, we simply can’t make use of automated payments in which case we need to find ways to reward and discourage certain behaviors. Incentives like these could include a small discount offered for early payment of invoices and/or a late payment penalty that is charged as interest on all overdue accounts.

We always recommend that you formalize your payment terms as part of your onboarding process and discuss this with your client right at the start of your relationship. These should include

  • The currency you wish to be paid in.
  • Your accepted forms of payment (cash, credit card, deposit, cheque) and any associated charges.
  • Payment due dates.


Use credit control software

This could be a game-changer for 90% of your clients as you can automate many of your processes to follow up on outstanding debt. Your software automatically monitors your accounts for overdue invoices, sends them automatic reminders to pay, and notifies them of further steps to be taken if they are in breach.

You can even set it up to exclude those special customers for whom you need a different approach. Yes, it is not ideal, but we all have them. 🙂


Lower your expenses

Although this will not enable you to collect more money that is due to you, it is simply good business practice. This should be part of your standard operating procedures. It will ensure you are able to weather times of restricted cash flow. Sufficient cash flow will place you in the best position to pivot your services or seize opportunities to expand. It could be as simple as investing the surplus and this in turn will help your business grow.

Also read our post on VAT registrations


Get credit before you need it

Nobody wants to go into debt just as you are starting a new business. But let’s be honest – applying for credit when your business is in trouble, is way too late. Get your credit application in as soon as your business qualifies for the required credit and leave it untouched till you need it. Set up automated payments to your loan to pay it off as quickly as possible once you start using it. A smarter way to stay on top of your credit requirements, is through the dashboard view Capitalise makes available, so you have a snap-shot view at all times of where a possible credit shortage might rear its ugly head

The main advantage a line of credit offers you is flexibility. Like an overdraft, you can access the money only when you need it.


Know when to say no

Saying “no” to a potential big contact can be hard for any business owner, but it’s an essential skill to master if you want to remain in business.

We all have to start somewhere and in the early days you’ll take on any customer through the front door because you need the cash flow. If a project is going to tie down your cash for a number of months you seriously need to consider whether the operational risk is going to be worth it. In South Africa taking on board any work from Government is notoriously risky and we’ve seen clients go into crisis mode after waiting almost 180 days for payment from certain municipalities. This might just be what sinks your business, so consider the impact carefully.


Xero accountants managing cash flowXero accountants managing cash flow

Ready to take your financial success to new heights?
How would it feel to have peace of mind knowing that your finances are in the hands of experienced professionals who are passionate about helping you maximise your financial potential?
Ready to experience the difference? Contact us today for a complimentary consultation and discover how our tailored accounting solutions can empower your financial future.
What our clients say?
Thrive CFO
Based on 10 reviews
powered by Google
Martin Mulder
Martin Mulder
12:36 17 Aug 23
I have only the greatest appreciation for this company. I was going through a difficult time and they were understanding and accommodating. My tax was handled speedily and efficiently.
Kevin Rademeyer
Kevin Rademeyer
07:20 17 Aug 23
We have been using Melissa, Marche and the rest of the crew at ThriveCFO for over 10 years, in order to compile our annual audit for Law Society. They have been exceptional, efficient and pro-active every year. I would not take the business anywhere else.
Jan de Wit
Jan de Wit
13:13 13 Jun 23
Our firm has been making use of the services of Thrive CFO for more than 10 years. Thrive CFO has amazing staff that is not only extremely helpful, but also very capable. We are extremely happy with their services and will continue to support them. They make accounting easy. Thanks Melissa, Marche and the rest of the Team - You Rock!!
LM Keyser
LM Keyser
07:13 13 Jun 23
The ThriveCFO team has been our trusted accounting and tax partner since 2010. They are competent, honest, approachable, quick to respond, and they really do care. I highly recommend them.
Andre Claassen
Andre Claassen
10:24 08 Jun 23
Prompt, professional and personal service!!
Palabadi Ramaphoko
Palabadi Ramaphoko
19:38 15 May 23
I'm impressed with the work you do. You are extremely professional and polite. I hope we will grow big together!
Deidre Oosthuysen
Deidre Oosthuysen
12:20 04 May 23
I feel as though Thrive CFO is a natural part of our business. 100% professional. Very knowledgeable. Incredibly organised. And with a work ethic and proactive communication practices, I know I am in the very best hands possible.
Sean Fabian
Sean Fabian
07:45 04 May 23
As someone who has had the pleasure of working with Thrive CFO, I can confidently say that they are an exceptional company with an unwavering dedication to their clients. From beginning to end, their commitment to providing top-tier financial services is evident in every interaction.One of the things that sets Thrive CFO apart is their focus on education. They take the time to educate their clients on financial best practices and help them understand the reasoning behind their recommendations. This approach ensures that clients are empowered to make informed decisions about their finances.Thrive CFO also uses the latest technology to streamline their services and make the financial management process as efficient as possible. They utilize cloud-based software to provide real-time financial data and make it easy for clients to access their financial information at any time.Overall, Thrive CFO is an exceptional company that is dedicated to providing personalised financial solutions that help their clients succeed. If you're looking for a financial firm that truly cares about your success, I highly recommend Thrive CFO.
Michael Dawson
Michael Dawson
15:48 02 May 23
Great experience with the team! Always willing to assist with questions and able to help guide my small business to ensure that I am compliant.
Riaan Schlebusch ITMC
Riaan Schlebusch ITMC
12:15 21 Apr 23
Professional, smart and friendly people.You only deal with the best of the best, and they know how to answer your questions, and they ensure that they understand you, and make they make sure to take the time to know your business.
See All Reviews

Ready To Take Your Financial Success To New Heights?

Scroll to Top