Proactive Cash Flow Strategies


By Patty Block

Henry Ford once famously said:  “Vision without execution is just hallucination.”  I love this quote because it’s funny and it’s true!  While revenue production is the core goal for every business, the real magic is in understanding and managing your cash cycle.  You can’t execute without cash.

Many small businesses struggle to appropriately price their services, define their billing and collection terms, and manage the cash flowing through their companies.  If you are not developing and implementing cash strategies, you are leaving money on the table.

Early warning signs of cash flow problems:

  • You struggle to pay your bills.
  • You are afraid to hire staff because your revenue is irregular.
  • You may be charging too little and over-delivering on services, so client accounts are not profitable.
  • You have trouble collecting what is owed from clients.
  • You are embarrassed to admit you are in financial trouble.
  • You suffer so much stress around money that you can’t focus on strategic issues for your company or for your clients.

Consequences of ignoring the early warning signs:

  • You have unsteady revenue.
  • Your relationships with clients and vendors suffer.
  • You are unable to attract or retain high-quality staff.
  • You have unprofitable accounts.
  • Your personal and business credit suffers.
  • Your company growth is stunted.
  • Your company reputation suffers.
  • You suffer emotional stress.

There are many things you can do to speed up your cash cycle, enhance profitability, and gain control of your finances.  It can be as simple as establishing a proactive billings and collections process or as complex as changing your pricing and reducing expenses.

Proactive Cash Flow Strategies:

  1. Launch ‘Collections Monday’.
    Schedule courtesy calls to clients before the payment is due.  Ask if they received the invoice and whether they have any questions.  Name it something clever such as ‘Collections Mondays’ and get in the habit of making these calls.  Email is for cowards.  Pick up the phone!
  1. Keep Your Cash for as Long as Possible.
    Prioritize payments to vendors and maximize the time allowed to pay.  Stagger payment dates so you don’t have significant cash flying out of your operating account all at once.  Maintain your good relationships with vendors and negotiate terms when possible.
  1. Get to Know Your Banker.
    Ensure that all of your bank accounts are federally insured.  Meet with your banker regularly to establish a strong relationship.  Think of the banker as your advocate.
  1. Stop Using Sales Tax or Payroll Tax Money to Float Your Operations!
    This is dangerous on so many levels.  Your exposure to potential penalties, fees, and interest along with a significant waste of your time and resources should stop you in your tracks.  Deposit funds into additional bank accounts that are separate from your operating account and don’t touch the funds until you pay the required taxes.  Obtain short-term operations financing if needed.
  1. Obtain a Business Line of Credit.
    You can only get a line of credit or loan when you don’t need it.  Plan ahead and have this safety net in place with the added bonus that it can help you build business credit.  Compare terms and rates between banks and with credit unions.
  1. Carefully Track Use of Company Credit Cards.
    Set limits on all cards used by employees.  The federal Credit CARD Act protects consumer credit cards but excludes those used for business and debit cards.  You may have significant exposure to fraud and theft with company credit and debit cards.
  1. Outsource Important Compliance Functions Such as Payroll.
    Leave the headaches to the experts who will process payroll, collect and pay your payroll taxes, and ensure reporting compliance.  It is worth every penny.

As a small company, you have an advantage in spotting trends from real data and real market experience and making decisions that you can implement quickly.  This gives you a competitive edge especially against larger companies that often struggle with bureaucracy and chain-of-command.  Ensure you have the cash to execute on your vision.


Patty Block, President of the Block Group Inc., empowers women business owners to develop a creative business model, navigate transitions, and design smart business solutions.  She can be contacted by phone at 713-826-0302, by email at, or visit her company website at


About Author

Comments are closed.