8 ways for small business owners to manage their cash flow

January 24, 2024

To be an entrepreneur is to be ambitious and have a vision. It also means tending to the details and staying organized.

Small businesses are usually founded by entrepreneurs who have a unique vision and a passion that drives them to work late hours, take chances and believe in what they’re doing. But, just as Thomas Edison once said that invention is one percent inspiration and 99 percent perspiration, successfully running a small business requires rolling up your sleeves and putting in the time with more mundane, day-to-day matters.

You can be driven, impassioned and have a great idea to fill a niche or serve customers in new ways, but if you don’t attend to the details of the business, like cash flow, you can create a heap of problems for yourself.

Today we’re going to lift up the hood and look at one of the most important of these business details: managing cash flow. Especially for early startups, knowing how much cash is coming in and going out, and accurately forecasting sales and expenses, is key to maintaining your company’s health.

No matter where you are in your business, keep these things top of mind:


1. Know when you will break even

The question, “When do I start to turn a profit?” is at the front of every small business owner’s mind. Rather than wonder, set a realistic goal for when you want to break even. This will help you to focus your efforts and provide a numerical benchmark for projecting your cash flow in the near future.  


2. Put cash-flow management before profits

This might seem counterintuitive; after all, profits are how you survive. However, if you aren’t organizing your cash flow, you’ll run into problems that a profitable quarter might not be able to fish you out of. Keep things organized and well managed so you can be ready for whatever success comes your way! 


3. Secure credit ahead of time

Too often, small business owners wait until they need it to secure credit. This can cause a lot of unnecessary stress, or worse. Talk to experienced business owners in your area and industry ahead of time to know how much revenue you’ll need up front. Take a realistic look at the situation and plan. You might have sufficient cash reserves or a rich uncle who is only a call away, but most small business owners should secure as much credit as possible. This is the best way to be prepared for the unexpected. 


4. Use a dedicated software to manage your finances

Even if you’re running a small operation and you think that a simple spreadsheet will suffice, it won’t. Think bigger! Most accounting software that is available today allows you to both hone in on the details and look at the big picture of your finances. There are, of course, plenty of other advantages these programs offer, but above all, using a dedicated system to manage your cash flow will keep you organized and on top of your financial dealings and hence, your business. 


5. Use a payroll service

It’s tempting to think that you can do payroll all on your own. However, many small business owners have found that having the professionals take care of collecting payroll taxes saves them an enormous amount of time, helps streamline their cash flow and is fully worth the cost. 


6. Accounts payable improvements

There is more than one way to save a dollar and there is more than one way to spend a dollar. Small business owners are always looking for ways to improve efficiencies and reduce costs. In addition to this, they should look at how they are paying their bills. Many credit cards have a cash-back bonus program. Even if you get just 1 percent cash back that could equate to as much as several thousand dollars a month, depending on the amount you spend. However, because credit cards tend to have a higher interest rate, you should only use them if you are sure you will be able to pay your balance off in full.


7. Schedule your payments

You don’t have to pay everything at once; in fact, you shouldn’t. This is not to say you should be delinquent on any payment; rather, to keep sufficient cash on hand, consider dividing your bills into three categories: 

  • Category 1: Must pay — This includes payroll, taxes or rent, things that you must pay in order to keep operating. 
  • Category 2: Important to pay — Sometimes utility bills and insurance payments have penalty-free grace periods, in which case, you might want to take advantage of this. 
  • Category 3: Payment is flexible — Many vendors and suppliers are happy to work out a flexible payment plan. Be honest with them, keep communication open and pay at the agreed-upon time.


8. Keep up on cash coming in

Making sure you get paid is, of course, one of the most important parts of your business operations. The sooner you get paid, the sooner you can put money back into your business and grow. Therefore, it’s vital to send out your invoices in a timely manner and establish clear terms of payment ahead of time. 

Be sure to factor in the fact that people and other companies are often late with payments, so if you want to receive payment within a month, make your payment terms 14 days.


Learn more about how U.S. Bank can help you successfully manage your small business.

Learn about U.S. Bank

Related content

Why credit cards should be the first choice for business payments

10 ways a global custodian can support your growth

How to talk about money with your family

For small business growth, consider the international market

Refinancing your practice loans: What to know

What type of loan is right for your business?

Business risk management for owners of small companies

Digital banking and cloud accounting software: How they work together

ePOS cash register training tips and tricks

How to make the most of your business loan

5 tips for managing your business cash flow

A simple guide to set up your online ordering restaurant

Tech tools to keep your restaurant operations running smoothly

How Everyday Funding can improve cash flow

4 ways Request for Payments (RfP) changes consumer bill pay

Cashless business pros and cons: Should you make the switch?

Higher education and the cashless society: Latest trends

How to fund your business without using 401(k) savings

Building a business with a great product and a greater purpose

Mapping out success for a small-business owner

Save time with mobile apps for business finances

How to accept credit cards online

Unexpected expenses: 5 small business costs to know and how to finance them

How to identify what technology is needed for your small business

Tools that can streamline staffing and employee management

Honey Luxury Beauté: growing a side project into an eye-catching beauty business

How increased supply chain visibility can combat disruptors

How to build wealth at any age

How a family-owned newspaper is serving its community

Making the leap from employee to owner

How small business owners can budget for the holiday season

How to start investing to build wealth

In a digital world, Liberty Puzzles embraces true connection

8 Ways for small business owners to manage their cash flow

How to get started creating your business plan

ABL mythbusters: The truth about asset-based lending

5 ways a business credit card program can grow your business

5 tips for being a great board member

Leverage credit wisely to plug business cash flow gaps

What corporate treasurers need to know about Virtual Account Management

How this photography business persevered through tough times

How jumbo loans can help home buyers and your builder business

How to apply for a business credit card

5 questions business owners need to consider before taking out a loan

Prioritizing payroll during the COVID-19 pandemic

Meet your business credit card support team

How to establish your business credit score

7 uncommon recruiting strategies that you may not have tried yet

Planning for restaurant startup costs and when to expect them

The moment I knew I’d made it: The Cheesecakery

How a bright idea became a successful business (in Charlotte, North Carolina)

How to establish your business credit score

What is needed to apply for an SBA loan

10 tips on how to run a successful family business

How to sell your business without emotions getting in the way

Why retail merchandise returns will be a differentiator in 2022

How business owners are managing during the supply chain crisis

How a travel clothing retailer is staying true to its brand values

Technology strategies to complement your business plan

Opening a business on a budget during COVID-19

Is raising backyard chickens a good idea financially?

How I did it: Grew my business by branching out

How small businesses are growing sales with online ordering

When small business and community work together

6 common financial mistakes made by dentists (and how to avoid them)

Business credit card 101

Do I need a credit card for my small business?

What kind of credit card does my small business need?

5 tips for creating (and sticking to) a holiday budget

How to test new business ideas

How a group fitness studio made the most of online workouts

How I did it: Switched career paths by taking an unexpected pivot

Year-end financial checklist

Community and Coffee: How one small business owner is breaking down barriers

How community gave life to lifestyle boutique Les Sol

The San Francisco bridal shop that’s been making memories for 30 years

Community behind Elsa’s House of Sleep

How Wenonah Canoe is making a boom in business last

How Lip Esteem is empowering women

How I did it: Transitioned from the military to a private sector career

How running a business that aligns with core values is paying off

How Gentlemen Cuts helps its community shine

Meet the Milwaukee businessman behind Funky Fresh Spring Rolls

How to build a content team

How Shampoo’ed is transforming hair and inspiring entrepreneurs

The different types of startup financing

Dear Money Mentor: How do I set and track financial goals?

How I did it: Joined a board of directors

Making a ‘workout’ work out as a business

30-day adulting challenge: Financial wellness tasks to complete in a month

Celebrity Cake Studio’s two decades of growth and success

How Al’s Breakfast is bringing people together

Break free from cash flow management constraints

How you can prevent identity theft

How tenacity brought Taste of Rondo to life

How a bar trivia company went digital during COVID-19

How Everyday Funding can improve cash flow


Start of disclosure content

Loan approval is subject to credit approval and program guidelines. Not all loan programs are available in all states for all loan amounts. Interest rate and program terms are subject to change without notice. Mortgage, Home Equity and Credit products are offered through U.S. Bank National Association. Deposit products are offered through U.S. Bank National Association. Member FDIC.