Cashflow Must Do’s

Cashflow Must Do’s

Cash is the lifeblood of a business and running out of it is the number 1 reason why businesses fail. Every business begins and ends with a positive cash flow. The cash flow determines the amount of money that goes in and out of your business.

Annette will go through five cash flow must do’s in your business and remarkably be a successful business owner. The 5 must do’s in your business are structuring your payment terms, positive impact of leasing, cash flow forecast, pricing profitability, and eliminating money leaks.

Highlights of this episode:

  • What is cash flow?
  • 5 Must Do’s in your business
  • Importance of leasing in business
  • Proper pricing of products/services


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In this episode, I'm going to teach you the five must do's so that your business does not run out of cash. Cash is the lifeblood of a business and running out of cash is the top reason why businesses go out of business. Enjoy listening.  I am Annette Ferguson, chartered accountant and certified Profit First professional and I run Annette and CO, a UK based accounting firm. 

5 must do's so that your business does not run out of cash

1.  Payment Terms

So number one, payment terms. Of course, the best way to get paid in your business is upfront, or in advance of you delivering a product or a service to your customers or clients. However, in some industries, that might not be altogether possible, therefore, can you get a deposit up front to cover your upfront costs, so you are never out of pocket on one specific customer or client.

It's great to structure your payment terms, so that you are never underwater at any point in time. Because if you structure your payment terms, so you are paying out money in advance of getting in, it can make your business very, very difficult to scale and it can put you in a constant cash flow crunch.

So setting up your payment terms with your customers and clients from the beginning, so you are either paid wholly in advance of delivering anything, whether that be a product or a service, or you get a substantial amount upfront to cover your upfront costs, so you are never out of pocket when it comes to delivering that product or service. 

2. Leasing rather than purchasing

Number two, leasing rather than purchasing. If you're going to purchase a big piece of equipment or machinery that you have a big cash outlay, either that needs to come from your own cash reserves in the business, or you need to take on loan financing to do that. Instead, leasing equipment can make much more sense because from a cash flow perspective, you know exactly what you're paying every single month, it's going out. 

You understand it and you don't have a big upfront payment required, but also as an added advantage lease payments are tax deductible, whereas loan repayments for example, the capital is not tax deductible on those. So leasing gives you a win-win in terms of cash and in terms of your tax position. 

3.  Have a cash flow forecast

And the third cash flow must do, is having a cash flow forecast. I know you might glaze over, it might sound boring, you might think, oh no do I have to deal with a spreadsheet. But I promise you that once you get a cash flow forecast in place for your business, it actually eases stress and strain around cash because you can look forward and you can understand when in your business, you're going to have cash crunch points, or indeed a cash, cash surplus.

It means that you can plan for those crunch point times and perhaps you, therefore, promote something earlier in order to get cash in earlier or you change what you're doing in your business to reduce the number of cash crunch points that you can see coming up as a result of your cash flow forecast. Now I do have a separate video on this which I will link to in the description. If you want to check out exactly how to do a cash flow forecast and get a cash flow forecast template for your business to make cash flow forecasting so much simpler. 

4. Pricing profitably 

Number four is pricing profitably. Now, this might sound like a bit of a well duh moment, but making sure that everything you deliver products or services are being priced properly. Because of course your costs, they go up all the time as we know as its life, but you need to refine your pricing and review your pricing on a regular basis to make sure that you are still profitable. Also things that people forget to layer in when they look at the profitability of their products or services are their own time often.

So what I recommend you do is you sit down and have a look at each of your products, programs or services. Write out the selling price that you have for that and then everything you deliver and the cost of delivery. Does it take three hours of your time to deliver, in which case price that in.  

Does it take your virtual assistant an hour to liaise back and forward with your customer, in which case, put that in and really check to make sure that everything you're doing is being priced in a profitable way for your business and that you don't have any sneaky products, programs or services that have gone in there that are actually not doing so well. And because there is also, remember the opportunity cost of these things.

So if you are working really hard on products, programs and services that are delivering you very, very small amounts of profit, but you have other ones over it on the other side that deliver much greater, then perhaps your time is best spent focusing on marketing the greater profit one, rather than the smaller profit one. That is what we call the opportunity cost of your time. So thinking about that as well, when you're looking at whether your products, programs, services, and offerings are priced profitably. 

5. Eliminating money leaks

Now, the fifth cash flow must do, is eliminating money leaks. Now, if you are familiar with my content, you probably have heard me speak about money leaks before. And I do have a separate video all around, finding and eliminating money leaks in your business, which again, I will put in the description to this video. So you can check that out afterwards. But money leaks are essentially money that is being spent in your business that is neither, one delivering you a positive financial return, nor two, it is not 100% necessary to keep the proverbial lights on in your business.

Not nice to haves, not 80% necessary, 100% necessary. So, if you're spending in your business is not 100% necessary to keep the lights on and two is not delivering you a positive return, the question is what is the purpose. And in most instances, you'll find it's actually a money leak in your business.  Money that is going out that just doesn't have to be and therefore creating a cash flow crunch in your business as a result.  

For a full exercise on finding and eliminating money leaks, like I said, I have a video on that too. So you can check that out to get that in place in your business and get rid of those money leaks, which will be causing you cash flow crunches.  We find that the vast majority of business owners we speak to you have some form of money leaks in your business. And I'm going to bet that you might just have to, so give it a go. 

Bonus must-do

I'm going to give you a bonus must do as well as six must-do for cash flow. And that is to read this book Profit First by Mike Michalowicz, because if you feel like the money comes into your business, and it all just seems to disappear back out, then this book is a must read for you. I have the PDF version of the core chapters available to you. So again, I will put that link in the description to this video and you can get that straight to your inbox. But this book basically helps with the management of cash and ensures that your business is significantly more profitable. So I massively recommend getting hold of that, if you do not already have a copy.


And if you're struggling with the accounting for your business, or indeed you have read Profit First and you need help and support with that, then please do reach out to me at,  I would love to be able to support you.  

Thank you so much for tuning in today. I hope you got lots of value from this episode. Now if you're struggling with any accounting things for your business, I'd love to help.  Make sure you reach out to me at podcast at annette and co dot co dot uk, that's and let me know how I can help. Of course, remember to subscribe to this podcast as well. Thanks again

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About the Author

Owner of Annette & Co. - Chartered Accountants & Certified Profit First Professionals. Helping online service-based entrepreneurs find clarity in their numbers, increase wealth and have more money in their pockets.

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