How to manage cash flow like a pro

Here are 5 ways on how to manage cash flow effectively

“Cash is king”. A tired old cliché? Not at all! Cash is the blood that flows through the veins of every company – without it, a business simply cannot function. And when it runs out, much like a heart attack, it can sadly be fatal. As such, it’s essential that business owners know how to manage cash flow optimally so that their businesses can avoid the risk of running out of cash.

Keeping on top of cash inflows and outflows sets your business up for success, so we’re sharing five ways that you can take control and manage your cash flow like a pro.

Our top 5 cash flow management tips

1. Keep business and personal finances separate

It sounds really obvious, but a common mistake, especially in family businesses and start-ups, can be mixing your business and personal finances. If you want to properly understand your company’s cash flow, you need to keep them apart. It will help you forecast any changes and know exactly how much cash your business is generating. It also creates a line between the two sides of your life that’s as important for your mental health as it is for the health of your business.

2. Build a cash reserve

Having cash to hand can be a deal breaker in the success or failure of your business, so when you can (and it may not be every month – that’s fine) fill the coffers! Building a business cash reserve puts you in a strong position, it provides a cushion to manage unexpected events and gives you the ability to jump on opportunities that might pop up.

3. Stay on top of your numbers

You need to be in a position where you can see (and understand) the financial health of your business at a glance. This means keeping your accounts up to date and working with a good accountant – they are worth their weight in gold. A great accountant doesn’t just ‘do the books’, they will provide advice on how to manage your cash flow better, as well as valuable counsel that can help fuel the growth of your business.

4. Use technology to monitor, forecast and manage cash flow

We’re living in a golden age of technology. There are now so many amazing products available that help to remove the administrative burden of running a business, be it uploading expense receipts or automatically allocating your bank transactions. Use them and simplify where possible. A quality cloud accounting software platform like Xero will enable you and your accountant to see your cash flow status at any given time and help with forecasting, tracking and reporting – all very useful tools when figuring out how to manage cash flow optimally.

5. Negotiate payment terms carefully…and make sure your customer sticks to them

Winning the wrong opportunities for your business will seriously affect your cash flow. It’s important to do your homework before offering payment terms to customers, especially when there are upfront costs for you to bear. Invest some time understanding the payment process relating to outstanding invoices and whether or not your future customer has a poor reputation for paying late. Don’t offer long payment terms lightly – stick to pro forma terms until you establish a good working relationship with them.

Once you have established and agreed to payment terms with your customers, make sure they stick to their side of the bargain. Waiting and chasing for payment for 30, 60 or even 90 days will really impact how effectively you manage your cash flow, as well as your decision-making agility.

Invoice financing takes this burden away and is a powerful tool in cash flow management. Your invoices will be paid in full within 24 hours – all for a transparent and competitively priced fixed fee. Hydr’s revolutionary invoice financing model means the control is in your hands.


Cash flow management is key to a thriving business as without it, your business can become severely limited. Follow these 5 tips on how to manage cash flow effectively, and you should be one step closer to ensuring your cash flow is in a healthy position. To further enhance how you manage your cash flow, consider leveraging invoice finance and start easing your cash flow management woes.

Are you looking for an Invoice Financing Partner? Use our Invoice Payments Calculator and discover if Hydr is the right invoice financing partner for you.

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