The expert-backed cash-flow tips for business owners

For small business owners juggling growth, client demands and day-to-day operations, it's easy to overlook whether there's enough cash on hand to keep things running. 

Cash flow can be an underestimated challenge for business owners, even in businesses that appear successful on paper. A full pipeline of bookings or clients, or a solid profit doesn't always translate into available funds, and it can often leave business owners scrambling to cover basic payments or a looming tax bill. 

The good news is that improving your cash flow doesn't have to mean a complete overhaul.

Often, a clearer view of your finances and a handful of practical tweaks can make a real difference.

Below we speak to two accounting experts, Emma Bowdler, Founder of The Women's Accountant, and Kate Cameron, Director at Rochdale Accounting and Business Advisory, who share their best cash flow advice and actionable tips for business owners.

The difference between profit and cash flow

First up, it helps to understand a distinction between profit and cash flow. Cash flow tracks the money moving in and out of your business day to day. Profit measures what remains after expenses.

"Profit tells you that your business model is working, whereas cash flow tells you if your business survives," says Bowdler. 

"Every business needs both, and most people will only track one. Loan repayments and tax both have to come out of the profit. So, on paper it can look like you had a really good month, but you can still feel the pinch."

Kate Cameron agrees. 

"I'll often have people say, 'Look, I've made this profit, but I don't have any cash, where did it go?',” Cameron says.

The most common cash flow mistakes

One of the biggest mistakes business owners make, according to Cameron, is not really understanding their own numbers. 

"Many assume the accountant's looking at it, and then just focus on the day-to-day," she says, noting it’s often how business owners start losing track of what their cash flow actually looks like.

Bowdler says she sees three patterns repeatedly in her work as an accountant.

The first is “living” out of the business bank account and using it as a place where the money comes in and gets spent because it's there. Separation between what belongs to the business and what belongs to the owner is critical. 

The second pattern is discounting prices to win work, without doing the maths first. 

"They might land a client, but they've already quietly eaten into that profit margin because they've undercut themselves. The more you do that, the more likely you are to end up fully booked but barely breaking even,” Bowdler says. 

The third is not knowing what it costs to keep the lights on. Without that number, it's almost impossible to price properly or know whether you've had a good month.

Warning signs your cash flow is in trouble

Cash flow trouble is almost always visible before it hits.

According to Bowdler and Cameron, some signs to look for:

• You've stopped opening your banking app because you already know the news won't be good
• You're delaying paying yourself, and one pay cycle quickly turns into two or three
• Clients who always pay on time have gone quiet
• You're dipping into a tax savings buffer to cover every day operating costs
• Credit cards aren't being paid in full and interest charges are mounting
• ATO debts aren't being met on time

Another quick fix: If you haven’t already, open a separate savings or tax account alongside your main business account and put funds into it regularly. 

It may also be wise to build out a cash-flow forecast, Cameron says. 

“The point is to map out what you expect to come in and go out over the next 8–12 weeks or develop into 6–12 months,” she said. 

“Once you have that picture, you can see exactly how many clients you need to invoice, how many products you need to sell, and whether you’ll have enough to cover your costs and pay yourself.” 

Advice for business owners

In her experience as an accountant, Cameron says it’s often women who carry the mental load of financial worry more heavily. She’s heard many women business owners describe the stress of lying awake thinking about whether there’ll be enough cash next week, whether the upcoming tax bill can be paid, and whether the business will survive.

She says equipping business owners with the information they need to manage cash flow can help lighten this load.

"When business owners feel empowered with their circumstances, the fears are quashed. They thrive. It takes those clouds away and lets them focus on what they do best."

Undervaluing and undercharging are also something both accountants see constantly. 

Cameron notes that when she sees business owners factoring in a client's ability to pay when setting their prices, they’re effectively absorbing someone else's financial stress into their own margins. 

"Take the leap with a pricing decision and be confident with it. I haven't had one client who has ever looked back and thought, 'I wish I hadn't done that.' It's always, 'I can't believe I didn't do it sooner’,” she says.

Bowdler wants to remind business owners that you don’t need to be a “numbers person” to get on top of your cash flow.

“You don't need to know all the numbers, but there are a few key ones that you should know, and you should track. And once you do know them, everything changes. Everything becomes clearer and a whole lot easier to navigate,” she says. 

“You don’t need to overhaul everything. Just start implementing with your next client. And then your next engagement. That’s it.”

This article was written in partnership with and originally published by Women's Agenda.