Worried About Your Cash Flow Problems? These 4 Tips Can Help

Blaine Bertsch

Blaine Bertsch

Co-Founder at Dryrun
Blaine is the Co-founder of Dryrun, a scenario-based cash flow and sales pipeline tool for accountants and their small business clients. With over 15 years as an entrepreneur and a decade as an agency owner in the creative industry, Blaine has spent most of his professional life on the front lines of small business. He's earned both Bachelor of Design and Master of Design degrees from the University of Alberta.
Blaine Bertsch

Latest posts by Blaine Bertsch (see all)

So, you’re a small business owner in search of financing.

But how can you be sure that the money you’re borrowing will cover everything you expect and last as long as it’s required?

Forecasting your cash flow means that you create a realistic snapshot of your future pitfalls and advantages. With an accurate cash flow forecast, you can greatly increases the odds that you’ll easily and accurately allocate your newly acquired funds to your best advantage once they’re sitting in your business bank account.

Often we see small businesses caught short on income as cash flow can swing wildly through the business growth phase. Without a firm visualization of your cash flow high-points and shortfalls over both the short term and long term, you stand a real chance that not all the dollars you’ve borrowed are going to go the extra mile for your business.

So how can you map out your cash flow, and make sure that small business funding goes where it should?

Follow these 4 tips to get started.

Tip 1: Ditch the List

Lots of startups and small businesses keep a list of expected income to track and discuss. The upside to this method is that it’s super easy to tally how much money you expect to come into your business.

The problem with the list is that it’s not mapped to a timeline. Your team isn’t going to have any concrete understanding of exactly when the money will flow into your business. Start looking at your cash flow on a timeline and plot the expected income to the most realistic date of when the money will be received.

Due dates are a good place to start, but if you believe the actual dates will differ, go by your best guess.

Tip 2: Identify your Capacity

Forecasting your expected cash flow in a timeline that’s at least several months out can help you identify potential issues. One of the common pitfalls is a crunch point with resources.

Highs and lows in your forecasted income can help you flag potential capacity issues. Capacity analysis can allow you to smooth out your use of resources and fill some gaps to help equalize your income in times of under-use.

Conversely, mapping capacity might tell you when you will be over capacity and need to hire more personnel while giving you the lead time to do so in an organized and economical fashion.

Tip 3: Plot Your Expenses

All of them. Start with grabbing a comprehensive list from your accountant and chart where all your expenses fall throughout the months for a minimum of a calendar year, whether they’re regularly occurring or one-offs that you can only make an educated guess about.

Next, predict other expenses that are likely to hit the business in the coming year.

Do you have any big capital costs? Purchasing new equipment? Hiring new staff? Tax payments? Take your time and make sure you aren’t missing anything, then add some buffer to cover unexpected expenses.

Tip 4: Proactively Bill and Collect Payment

For businesses that are paid via invoice, especially those that are project-based business, mapping project milestones against a calendar can ensure that you’ve got enough cash on hand so that people, materials, and equipment are in place.

Proactively billing at time or deliverable milestones will continue to keep you out of the cash crunch and minimize the time and resources you have to devote to pursuing payment that you’re owed.

The Bottom Line

Applying any one of these tips (or heck—all of them!) will make sure that you’ve mapped out when and how it’s most advantageous to use acquired funding, whether to shore up business processes, invest in equipment or personnel for necessary tasks, or plough the capital you’ve received into growth.

Editorial Note: Any opinions, analyses, reviews or recommendations expressed in this article are those of the author’s alone, and have not been reviewed, approved, or otherwise endorsed by any of these entities.
Blaine Bertsch

Blaine Bertsch

Co-Founder at Dryrun
Blaine is the Co-founder of Dryrun, a scenario-based cash flow and sales pipeline tool for accountants and their small business clients. With over 15 years as an entrepreneur and a decade as an agency owner in the creative industry, Blaine has spent most of his professional life on the front lines of small business. He's earned both Bachelor of Design and Master of Design degrees from the University of Alberta.
Blaine Bertsch

Latest posts by Blaine Bertsch (see all)

1 Comment

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  • Ben Rashkovich

    Friday, October 14th, 2016

    Great advice, Blaine!

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