Close this search box.
Blog » Business Tips » How to Avoid a Cash Flow Crunch in Your Business

How to Avoid a Cash Flow Crunch in Your Business

flow of cash money

One of the biggest problems faced by small businesses is consistent cash flow. A US Bank study found that cash flow problems account for why 82% of small businesses fail! 

It’s understandable; many people who start businesses do so because they have a passion, not business experience. They want to fix a problem they see, or they want to share their creativity with the world. They may not have the business know how or understand what systems they need to put into place to keep their business afloat.

Here’s how you can avoid that cash flow crunch for yourself and keep your business (and personal life) running.

Have an Invoicing System

Handling all your invoices yourself is a sure fire way to get behind, miss details, or forget to follow up on late payments. You can’t keep your invoice to do list in your head, and updating a spreadsheet is a task that many dread.

Having an invoicing system like Due means you can create a template for your invoices, set up recurring payments, automatically set reminders to go out a certain amount of days beyond the due date. All those things that currently take up your brain space and work time? Due can do them for you.

Having automated invoices for recurring clients can mean regular payments. Reminders to late clients mean there won’t be month-long gaps between payments.  These help ensure there’s always cash coming in.

Invoice More Than Once a Month

A common trend in freelancing or small business work is to invoice only once a month at the end when you’ve completed all the work for each client.

There’s no law that says that’s what you have to do. And a great way to avoid a cash flow crunch in your business is to invoice as soon as you’re done with a client’s work. Sending out invoices throughout the month means that payments should come in throughout the month.

Set Up Systems ASAP

The more systems and structure you have in your business, the better off you’ll be. Having an invoicing software is one system. What else can you systematize?

Have templates for common emails you send; requests for your bio and headshot, pitches, etc.

Set up automated emails and marketing funnels; automating emails is a huge time saver and can generate sales.

Client management software; track warm and cold leads, send out contracts, and save data with a client management software.

Having systems in place will make it easier for cash to flow freely through your business. Often payments will get held up because there is a breakdown in a system or because there is no system. Avoid a cash flow crunch by keeping channels open and running smoothly.

About Due’s Editorial Process

We uphold a strict editorial policy that focuses on factual accuracy, relevance, and impartiality. Our content, created by leading finance and industry experts, is reviewed by a team of seasoned editors to ensure compliance with the highest standards in reporting and publishing.

Student Loan Expert and Founder of Bravely Go
Kara Perez is the founder of Bravelygo. Kara discovered her love of finances courtesy of her quarter-life crisis. Broke, underemployed and saddled with student loan debt, she realized that her lack of financial education was crippling her adulthood. She now connects individuals with how to save and make money. She freelances in the areas of personal finance.

About Due

Due makes it easier to retire on your terms. We give you a realistic view on exactly where you’re at financially so when you retire you know how much money you’ll get each month. Get started today.


Top Trending Posts

Due Fact-Checking Standards and Processes

To ensure we’re putting out the highest content standards, we sought out the help of certified financial experts and accredited individuals to verify our advice. We also rely on them for the most up to date information and data to make sure our in-depth research has the facts right, for today… Not yesterday. Our financial expert review board allows our readers to not only trust the information they are reading but to act on it as well. Most of our authors are CFP (Certified Financial Planners) or CRPC (Chartered Retirement Planning Counselor) certified and all have college degrees. Learn more about annuities, retirement advice and take the correct steps towards financial freedom and knowing exactly where you stand today. Learn everything about our top-notch financial expert reviews below… Learn More