Throughout the lifecycle of a business, cash flows in and out of a business like in a dam.

The reason why small businesses experience cash flow problems is that often the two factors of stable income and cash outflow do not come together within the same time frame. Small businesses are usually set up on a shoestring budget with no real reserves.

Cash flow is the physical movement of money into or out of the bank account or cash register.

Cash flow management deals with “managing” this movement of cash into and out of the business.

• The business not being capitalised properly
• Cash flow being slow to materialise due to lack of business
• The business not collecting on debtors (invoices) quickly enough
• High expenses, low revenue

How do you manage this?

• Capitalise adequately (at least 60 days’ worth of revenue to function optimally)
• Collect from debtors (clients) as quickly as possible
• Ensure the correctness of invoicing
• Keep expenses as low as possible
• Managing stock on hand
• The majority of your expenses must be variable and linked to business performance
• If the revenue is down, so too must be your expenses

• A business savings account is an account you can use to save earnings for future business use. This must be an account that allows you easy access to your money when you need it.
• Having money in your business savings account improves your credit rating. For example: If you need a loan, you have a better chance of having the application approved as it demonstrates to the financial institution that you have the means to pay it back.
• You don’t have to deposit large sums of money – experts say 10% of the profit – but you start off with what’s affordable to you.
• Depositing small amounts will gradually grow with interest.

Benefits include:

• Prepared for unexpected events or incidents
• Save for tax payments
• You earn interest
• Adds to your retirement fund
• Funds are protected
• Easily accessible when you need it
• Helps increase your credit profile

• Not all products or services cost the same
• You have freedom of choice in selecting a service at a fee that is affordable to you
• Banks have reduced rates for some accounts to help you meet your banking needs
• Some ways in which you can pay less bank service fees are:

1. Use ATMs wherever possible
2. Plan your cash withdrawals
3. Self-service channels cost less

Self-service channels are cheaper

• Internet banking
• Banking apps
• Cellphone banking
• Electronic wallets