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Cash Flow: The Lifeline of Your Business

Businesses thrive on cash flow, not profit. Failure to understand and manage your cash flow can determine the success or failure of your company. According to a U.S bank study, 82% of business failures are due to poor cash flow management. Without positive cash flow, you cannot buy inventory, pay or hire employees or secure financing or a line of credit.

Positive cash flow helps insulate your business during struggles, downturns, or unpredictability. It is also a must if you want to grow your business and increase profits.

What is cash flow?

Cash flow is the measure of how much money is moving in and out of your business during a specific period.

As a business owner, you need to know exactly how much money your company is making and exactly how much money your company is spending. Why? Because having a clear and accurate picture of your financial situation will remove the guesswork and allow you to make informed decisions.

Effective cash flow helps you understand your company’s financial behaviour. In what months your company is generating more revenue, what months are slower. It helps you predict the ups and downs so you can plan and be conscious of your spending.

How to maintain a positive cash flow?

  • Spend wisely
    Revenue is rarely consistent. Most businesses experience seasonality. Some months have more sales, other months are slower. Understanding these patterns in your company will help you plan a more effective financial strategy. After a good month, it can be tempting to increase expenses, hire new people, purchase new equipment, move offices but be careful. The ultimate success of your business relies on its ability to perform long term. Remember to set aside money for future expenses.
  • Apply for a line of credit – before you need it
    The truth is, getting a line of credit is much easier when you do not need one. That is why knowing your company’s financial behaviour will help you plan. If you know you will need a line of credit down the line, the time to ask for it is not when you are running out of cash. Banks are more likely to agree to a line of credit if you have sufficient cash flow to pay it back. They are also more likely to set a higher limit on your line of credit if you reach out when your cash flow is positive.
  • Keep close track of payables & receivables
    To maintain a positive cash flow in your business, you should make sure your closely tracking payables and receivables. Track accounts receivable to identify and avoid slow-paying customers. Consider sending out invoices more quickly, offering an option to pay electronically and charging interest fees to speed up the payment process. On the other end, you can also save money by paying your bills on time and avoiding late fees. Not only do late payments affect your cash flow, but they also impact your credibility as a business.
  • Cash flow forecasting
    It is as important to understand your company’s financial situation now as it is to forecast what will it be in the future. If a business runs out of cash and is not able to obtain finance, it will become insolvent. It is necessary to plan and anticipate future challenges to be able to prepare accordingly.

How to calculate cash flow?

With the increasing complexity of operational processes, it is harder than ever to consolidate financial information. Regardless of your sector or industry, your business is most likely dealing with a large amount of financial data. This data originates from various sources such as accounting systems & ERPs, internal inventory systems, Customer Relationship Management software (CRMs), several bank accounts, spreadsheets, etc. All of this information contributes to building the financial picture of your company.

The challenge then becomes consolidating all of the information. Most companies calculate cash flow in one of three ways:

  1. Use spreadsheets: A manual process of comparing information. This method gets increasingly difficult as the business operations grow.
  2. Use accounting software: An accounting software will automatically calculate your cash flow, BUT you will need to upload the data manually so the software can read and interpret the information.
  3. Or hire a financial expert (aka an excel specialist).


The most common complaint coming from business owners is lack of time. Keeping track of all the operational transactions in a business is extremely time-consuming. As a business owner, you would rather focus your time and energy on growing your business, building relationships and increasing sales wouldn’t you?

We understand this. That is why we created SmartConcil, a tool that simplifies your cash flow management. Acting as a connector, our software easily integrates with the internal systems your business uses (accounting & ERPs, internal inventory, CRMs, national & international bank accounts, spreadsheets and more), allowing your business financial transactions to flow and be reconciled automatically.
An automated process guarantees information integrity and reliable financial reports on time.

Learn more about our cash flow management tool on

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