Cash flow and business growth

Updated on November 2020

The growth of your business brings both excitement and concern. Excitement for all the new projects and possibilities lying ahead, concern for all the additional costs, the uncertain revenue; in short – the cash flow.

So how can you keep a balanced cash flow when your business is growing?

Forecast and Plan. Think of cash flow as the fuel of your growth – the more you pump, the bigger the power and the costs. Therefore, work on a development plan and make sure you add both the level of expected sales and the total costs generated by it. Make sure you have everything on a timeframe.

Take into consideration that some of your invoices will be delayed, but you still need to support daily operations. Try to schedule both inflows and outflows as accurate as you can so you learn when you need cash and when you may get it.

A new start – get the best deal. Business growth means getting to the next level; a new level, which also means a new start. Acquisitions will be made, people will be hired and new utility contracts will be signed. Have your estimated revenue stream in mind when negotiating payment terms for your future bills. No need to underline how important it is to synchronise payments with available cash.

In some situations you can also use your loyal client card to obtain extended payment deadlines or even discounts; it may seem of poor value, but even a day in your favour can make a considerable difference for the future of your company.

Sales increase. Yes, growing the business implies, naturally, an increase of sales. But the initial revenue may prove insufficient to cover the costs of your growth. What’s to be done? First of all, make sure you have an additional inflow stream available in case of urgency. It may be an investment from a business partner, a loan or your personal money. The aim is to avoid stumbling before reaching your growth goals.

Also, instead of spending even more resources to convert prospects into clients, try to focus on increasing sales volume with the existing clients. They are here already, they know you, so less effort is required to get them to buy your new or improved products and services. In return, you get the precious cash faster to pay the incoming bills and support your daily activity.

Keep an eye your cash flow. When your business is growing it’s more important than ever to be careful with your cash flow, even if this means to share the pressure with your clients too. Avoid high accounts receivable: send your invoices on time, use reminders, offer different types of payment and give discounts for advance payments. In the end this will benefit your clients too, by allowing you to offer them better products and services.

We know, it’s easier said than done. But if you approach it step by step, starting today, it will become more comfortable with time. Plus you can always use technology to take care of the tedious tasks. With ThinkOut it’s now easy to take control over your business financials. Analyse your transaction history, look for activity patterns, plan your growth and always keep an eye on daily cash flow.