Cash Flow Management Tips

34% of SMBs have only a month or less of cash reserves. How do we address this critical issue? Here are 10 essential cash management rules: 1. Understanding Cash Metrics: Focus on operating and free cash flow, not just profits. 2. Building Cash Reserves: Maintain enough cash to cover 3-6 months of payroll, slow months, and unexpected equipment costs. Be cautious in volatile industries. 3. Analyzing Beyond the Bank Balance: Use weekly financial reports instead of just checking the bank balance to better understand cash obligations. 4. Efficient Invoicing: Invoice immediately and manage accounts receivable proactively to ensure quicker payments. 5. Strategic Payment Scheduling: Don’t rush to pay bills; optimize payables for better cash flow and maintain good vendor communication. 6. Inventory Management: Treat inventory as an investment and balance stock levels to avoid cash tie-ups. 7. Growth and Cash Flow: Manage growth carefully by securing credit in advance and understanding the cash conversion cycle to prevent cash shortages. 8. Tax Planning: Treat taxes as a critical expense and work with a knowledgeable CPA to plan for tax implications. 9. Prudent Use of Debt: Use debt strategically to support growth and investment, and maintain diverse banking relationships. 10. Maintaining Flexibility: Develop a flexible business strategy that includes multiple suppliers and cross-trained staff. These strategies can help SMBs manage their cash flow more effectively and safeguard against financial crises. If you want to go deeper, I wrote about this in my newsletter. Please read and subscribe: https://lnkd.in/gP4KXvDU

At my last job, we were focused only on the P&L But when cash became urgent, nobody knew which levers to pull So I spent hours breaking it down: -What drives cash in/out beyond profit -Which KPIs actually matter -Small fixes that create breathing room I’ve collected these (and more) into a cheatsheet you can use: https://lnkd.in/eMZXUffh It’s a one-stop reference with: Essential finance formulas and KPIs Accounting rules and principles Working capital, cash flow, and valuation guides Time value of money shortcuts you can apply instantly Too many companies suffocate because they don’t manage their Cash Conversion Cycle (CCC) The CCC shows how long it takes to turn investments in inventory and other assets into cash from sales The formula is simple: CCC = DIO + DSO – DPO Why it matters: - Traces the full lifecycle of cash - Enhances cash flow by optimizing DIO, DSO, or DPO - Highlights inefficiencies in inventory, receivables, and payables 5 ways to optimize your Cash Conversion Cycle: 1. Implement JIT Inventory – reduce excess stock, improve turnover 2. Negotiate Longer Payment Terms – extend payables without penalties 3. Streamline invoicing – expedite collections, offer early payment discounts 4. Build a strong Cash Culture – involve all departments in optimizing cash 5. Use Advanced Forecasting Tools – predict demand accurately, align inventory Cash isn’t just a number on a balance sheet—it’s the engine that keeps your business alive and growing How are you currently optimizing your Cash Conversion Cycle? Get my Ultimate finance cheatsheet here to help you out: https://lnkd.in/eMZXUffh

A startup overspending after a successful fundraise? Surprisingly common.   The more you celebrate your fundraise, the faster you need another one. In the early stages, every rupee spent should either bring you closer to PMF or strategically support extending your runway. Yet, after a fundraise we see fancy offices, too many hires, avoidable travel or upgrading tools prematurely. I've seen how quickly things go off track when money is spent without clarity. Being frugal early sets the stage for long-term growth. Here are 10 ways startups can stay frugal without losing momentum: 1.    Delay expensive offices. During early stages, remote work and co-working spaces can keep overheads low and offer more flexibility as you grow. 2.    Hire for attitude and potential. Look for adaptability and passion for your mission. Skills can be learned, but a strong, growth-oriented mindset is invaluable. 3.    Keep teams lean and roles flexible. A small, multi-skilled team can quickly adapt to changing needs, ensuring resources go towards key areas of growth. 4.    Use no-code and low-code tools. These can help you move quickly and save costs, especially when you're testing ideas or validating concepts. 5.    Prioritize pilots over perfection. Instead of spending months perfecting your product, launch an MVP, get feedback and iterate quickly based on real user needs. 6.    Negotiate everything. Ask for startup discounts on software subscriptions and service providers. Your startup status can often unlock better deals. 7.    Focus on customer-funded growth. Prioritize revenue-generating activities — subscriptions, product sales, service fees — rather than relying too heavily on outside funding. 8.    Be obsessed with ROI. Question how each expense contributes to growth or PMF. Make every investment intentional and justified. 9.    Measure marketing ROI. Track campaign performance with analytics to ensure every marketing rupee generates measurable returns. 10. Reward outcomes, not optics. Encourage a culture where results matter most, not appearances. THE OTHER SIDE OF FRUGALITY While frugality is key, balance is equally important. Keep these counterpoints in mind: ◾️Physical office spaces can enhance team bonding, collaboration. ◾️Specialized experience in technical or senior roles can make a critical difference in execution. ◾️No-code tools may create limitations as you scale, so evaluate long-term needs before committing fully. ◾️An overly rushed MVP might lead to negative customer feedback that's hard to recover from. ◾️Obsessing over short-term ROI might prevent necessary investments in brand-building or talent. ◾️Some marketing strategies may not show immediate returns but can deliver significant long-term value. Frugality requires deliberate choices. But balance it with strategic investments to drive efficiency and long-term success. What frugality hacks have worked well for you? #startups #leadership #entrepreneurship #execution    

No. 1 reason a lot of businesses fail in the first year of it operation is not being able to manage the cash flow properly. Cash flow is the money coming into and going out of a business. Maintaining cash flow is important because it ensures a business can pay its bills, invest in growth, and avoid financial trouble. -> Make sure to regularly update your cash flow projections. Use sophisticated forecasting tools to anticipate shortfalls and surpluses, allowing you to make informed strategic decisions. -> Negotiate extended payment terms with suppliers while incentivizing customers to pay early. Offering slight discounts for early payments can improve your cash position. -> Adjust pricing based on demand, seasonality, and inventory levels. This strategy can help smooth out revenue fluctuations and maintain steady cash flow. -> Establish lines of credit and explore short-term financing options before you actually need them. Having access to quick funds can buffer against unexpected cash flow dips. -> Focus on metrics like days sales outstanding (DSO) and days payable outstanding (DPO). Keeping these numbers in check ensures a healthy balance between incoming and outgoing cash. -> Maintain open lines of communication with your financial partners, including banks and investors. Their support and flexibility can be invaluable during tight periods. -> Implement just-in-time (JIT) inventory systems to reduce holding costs and free up cash tied in stock. This requires tight coordination with suppliers and accurate demand forecasting. -> Create contingency plans and reserve funds for emergencies. Having a financial cushion can prevent disruptions and give you peace of mind to focus on growth. Remember, effective cash flow management isn’t just about survival, it’s about positioning your startup for sustained success and scalability. #StartupFinance #CashFlowManagement #Entrepreneurship #BusinessGrowth #StartupTips

Shopify’s Fintech Stack Shopify’s fintech stack includes the following products : Shopify Pay — This is Shopify’s checkout button for online stores. It offers an accelerated checkout option for customers by allowing customers to save credit card information, along with other data. Shop Pay is remarkably similar to Amazon Pay and Apple Pay. Sellers can enable Shop Pay just like you would any other options for third-party providers on your Shopify website. Shop Pay Installments — More recently, Shopify integrated Pay with Affirm to offer Pay later option at check out, which will let merchants offer their customers more payment choice and flexibility at checkout, helping merchants boost sales through increased cart size and higher conversion. Shopify Balance — gives merchants access to critical financial products to start, run, and grow their business, including the Shopify Balance Account, Shopify Balance Card, and rewards such as cashback and discounts on everyday business spending like shipping and marketing. The key hook is that as soon as a customer has paid on the e-commerce store a merchant would have that cash available immediately. This will be instant and without fees, unlike most business bank accounts that take days and charge fees. Shopify Capital — Providing loans ranging from $200 to $1 million to merchants. Shopify has already distributed over $1 Billion in loans. Since Shopify has access to all the sales (and subsequently CashFlow) data, their risk underwriting can be more accurate than traditional banking Why is it valuable to Merchants? By integrating merchant focussed fintech products (Balance + Capital) into the Shopify platform, Shopify solves the most critical problem that small businesses run into — managing CashFlows. Typically, it takes 3–4 days to receive money into an external bank account, once a transaction is processed on Shopify (or on any online store). However, through Shopify Balance + Payments combination, merchants on Shopify can receive their funds the same day as the transaction happens. Secondly, through Capital, Shopify ensures that merchants can easily borrow funds they need for growth. Traditionally, merchants would either go to their bank to access a credit or to digtal lenders such as Kabbage to meet capital needs. Since Shopify has all the sales data of merchants, it can better predict the risk in providing loans to a merchant than traditional or digital lenders. Also, this underwriting is almost instantaneous since Shopify already has the required data. Thus making it easier for merchants to access capital and much safer for Shopify to lend. Source George Slawek / Hardik Tiwari #fintech #payments #shopify #ecommerce

Small Bets, Big Momentum: Financing That Turns Over Big raises look impressive. Fast cycles build portfolios. Small, repeatable projects shine when the money moves on a rhythm. Not once at the end. Again and again, site to site. The question What happens when we design the capital stack for short loops and quick redeploys instead of one long bet? Why it works Cycle time is a return. Cash that comes back in 6–12 months can fund the next site without a fresh roadshow. Options stay open. Refi, hold, or sell a single building without putting the whole plan at risk. Local trust compounds. Bankers, appraisers, and inspectors learn the pattern. Approvals get cleaner. Ownership stays closer to home. Smaller equity checks from aligned partners beat a single large, impatient ticket. What it looks like at a high level -A simple senior loan from a bank that likes small infill. -A tight equity circle with clear payout from cash flow or refi, not just a sale. -A standing, pre-approved package you reuse on every site. -Draws and inspections on a predictable cadence. -The same plan, specs, and team so underwriting feels familiar. Simple moves, not heavy lifts -One-page capital brief. Plain terms, timeline, and uses of funds. -Recycling plan. Spell out how returns from Project 1 seed Project 2. -Appraisal file. Photos, rent comps, and costs from prior runs to de-risk value. -Banker cadence. A 30-minute update monthly. Same format every time. -Investor rhythm. Quarterly notes that show progress, not drama. Signals to watch -Months from close to stabilized cash flow. -Percent of equity recycled into the next deal. -Draw timing variance from plan. -Cash-on-cash per cycle, not just per year. -Appraisal variance vs. pro forma. Reframe Cost of capital matters. But speed, clarity, and repeatability often matter more for small projects. Design for turnover, not spectacle. Who this helps Small developers building a steady pipeline. Faith and school campuses moving in phases. GC-led teams co-investing in repeatable work. Community lenders that want clean, replicable execution. A next step you can take this week Write your one-page capital brief. Project size, timeline, basic terms, and the plan to recycle returns into the next site. Share it with your banker and two aligned investors. See how different the conversation feels when the play is repeatable. If you want a partner to set the stack, prep the package, and guide the first cycle, shoot me a DM. Let’s build momentum, one small, repeatable project at a time.

Navigating your SME in an uncertain economy 📈 These days uncertainty is like the new normal. From recent trend of global trade war, ongoing regional wars, even to unfinished post-COVID economic recovery— business owners today are dealing with a very complex business environment with many unpredictable variables. For SMEs, the pressure is even much higher compares to large corporation. That means the traditional financial practices may not be enough to sustain your business and a resilient financial foundation has now become more essential. As a Fractional CFO and Business Transformation Advisor, I believe the businesses that truly succeed during these tough times are those that focus on managing their business financial resilience 🎯. Below are several practical tips that can help build a resilient financial foundation of your business: 1️⃣ Control what you can: Build stronger financial controls. Even simple steps like reviewing your weekly cashflow can make a big difference. 2️⃣ Prepare cash flow budget for several scenarios: Don’t just plan for the best case. You need to anticipate slowdowns, supply chain shocks, or shifts in demand. 3️⃣ Stabilize your cash flow: Prioritize stable cash flow by continuously monitor your payment terms with clients and vendors. Keeping a close eye on cash flow is crucial in navigating economic uncertainty. 4️⃣Build adequate cash reserves: Aim for reserves that cover at least 3 to 6 months of your business fixed costs. It’s not easy, but small, consistent allocations can quickly add up and provide peace of mind during volatile times. 5️⃣ Effective cost management: In these challenging times, you need to focus on having effective cost controls instead of aggressive cuts. Identify essential vs. non-essential expenses. 6️⃣ Upskill your team: Empower your finance and ops team to make smart and data-driven decisions. 🤔 As SME business owner, how are you strengthening your business’s financial resilience? Share your insights in the comments below. If you're gearing up to scale your SME or early-stage business to new heights, let's connect. Together, we can explore strategies to optimize your business cash flow and strengthening your financial foundation. Also, you may consider joining Cohort 2026 of our Stanford Seed Transformation Program using this link https://lnkd.in/ebMYaKfE to learn more on how to scale up your business the right way and at the same time connect with other great business founder in the program. #ScalingUp #BusinessTransformation #Resilience #FractionalCFO

Burning Cash? Tech Founders....I see you. 👀 I get it, you’re a tech founder with a tech team. You’re building a product. It solves a problem. You’ve raised some money. You’re gearing up for the next round. You love to build - it’s your thing, your expertise, and you’re bloody good at it. Customers give feedback, so you keep building. You want it to be perfect. It feels right. But here’s the harsh truth: you’re burning cash faster than Elon over at Twitter 🔥 (or X… whatevs!). Unlike Elon however, most start-ups don’t have billions in the bank to soften the blow. The Problem 💡 When you pour endless time, energy, and resources into perfecting your product, without validating whether customers actually need those features then you’re throwing cash into the wind and it's going to hurt you, badly! Here’s the reality - Customers don’t need every bell and whistle right now. They need their core problem solved. Focus on delivering what truly matters. The "nice-to-haves"? They can wait until you’ve hit MRR and your cash flow looks healthier. And speaking of cash... cash flow forecasting isn’t optional 👊 If you’re not tracking where every pound is going, your runway is already running out. The Solution 💡 Sales will always beat polish. So, here’s what you can do: 1️⃣ Launch the damn thing! Focus on the core needs only. Get your product into customers' hands while it’s “good enough” to solve their biggest pain point. The bells and whistles can wait. 2️⃣ Track Your Cash Flow Weekly: Cash flow forecasting is a must. Know exactly where your money is going and how long your runway is. 3️⃣ Prioritise Revenue-Generating Features: Not every feature is created equal. Focus on what drives customer value and sales. Save the “nice-to-haves” for later. My Tip for Tech Founders: Building isn’t the problem, it’s how and why you build. Launch early. Build smart. Prioritise cash flow. And for the love of all things tech, don’t wait until your runway disappears to start selling.

Most founders think finance problems show up in the P&L. They don’t. They show up in timing. Your revenue is fine. Margins are okay. Even cash in the bank looks healthy. But you’re still gasping for liquidity when you need it most. Why? Because your finance function is tracking what happened, not when it happens. Often while advising D2C and mid-market companies I’ve seen: Marketplace payouts landing 45 days late Returns/refunds silently taking down gross margins Inventory piling up right when vendors want early payment On paper, you’re profitable. The real CFO job is time-shifting finance: Aligning payables to receivables Tightening reconciliation so you see the true cash position Building working capital buffers before growth cycles A few controls that can make a real difference: 1️⃣ Revenue cut-off tests → Ensuring transactions are recognised at the right period, not just when cash comes in. 2️⃣ Vendor ageing vs receivable ageing → A simple matrix that tells you if you’re funding your customers more than your suppliers are funding you. 3️⃣ Returns provisions → Without a reconciliation between gross sales, actual refunds, and marketplace debit notes, you’re overstating topline. 4️⃣ Inventory turns vs payables cycle → If stock rotation lags, you’re bleeding working capital even with positive margins. One board-ready metric to track: Cash Conversion Cycle (CCC). It tracks receivable days + inventory days – payable days into a single signal for liquidity crunch. This isn’t glamorous but it’s the difference between scaling smoothly vs being forced into desperate fundraises. What’s the one “timing shock” you’ve faced recently?

Your holiday sales are booming—but your bank account is empty. Here’s why👇🏻 It’s the most profitable time of the year…until you check your bank balance. Most Ecommerce founders miss: High revenue doesn't necessarily mean healthy cash. Let me explain. 1/ You spent cash 60–90 days ago on inventory, freight, and creative. - The revenue is just catching up now. - You’re collecting sales after paying suppliers. - Your margins look great on paper—but your bank account disagrees. 2/ Ad costs spike during peak season. - You’re competing with every brand on Meta and TikTok. - Ad platforms charge you immediately while payouts from Shopify and Amazon lag. 3/ Returns are coming. - January will claw back a chunk of December’s revenue. - If you’re using cash accounting, you can'y rely on your P&L. 4/ Delayed payouts mean an invisible lag. - Shopify and Amazon don’t pay instantly. - That delay can create a “phantom profit” gap of 3–10 days on high volume. --- Here's how I advise my clients to tackle the holiday slump: Map your cash flow, not your sales. Forecast payouts vs. expenses weekly. Know your cash conversion cycle cold. Protect Q1 liquidity before Q4 ends. Why? Profit "on paper" doesn't pay the bills. Cash does. --- What’s your biggest cash flow pain during Q4? ♻️ Repost this if a founder you know is about to hit a “broke at record sales” moment. P.S. Need help building a 13-week cash flow plan before Q1 hits? Let's make it happen → https://lnkd.in/eZ9cu5vR