Succeed As Your Own Boss

ENDING SMALL BUSINESS FAILURE

  • Home
  • About
  • Book Melinda
  • Consulting
  • SBL Store
  • SmallBizLady University
  • Free Tools
  • Podcast
  • #Smallbizchat
    • Be a #SmallBizChat Guest
  • Blog
  • Contact
    • We’re Hiring!
You are here: Home / Cash Flow & Finance / The 5 Biggest Mistakes That Can Ruin Your Company’s Cash Flow

The 5 Biggest Mistakes That Can Ruin Your Company’s Cash Flow

October 2, 2018 By Melinda Emerson Leave a Comment

Feel free to share...Share on facebook
Facebook
Share on twitter
Twitter
Share on google
Google
Share on linkedin
Linkedin
Share on pinterest
Pinterest
Share on reddit
Reddit
Share on email
Email
Share on print
Print

Guest Article

Cash flow is one of the most important aspects when it comes to running a business. As a business owner, you’re always trying to balance the money coming in versus the money going out. While it is important for you to be making a profit, it’s even more crucial to determine whether your cash flow is positive or negative. We’ll look at some of the biggest mistakes that you can make as a business owner that can send your cash flow plummeting. It’s critical that you understand these mistakes so that you can avoid them in your business.

  1. Failing to track expenses

If you neglect tracking your expenses, you can end up spending far more than you think. For a new business in particular, you can be eager to get new customers even if that means taking a loss to gain that new customer. The same can be said when you’re searching for a new employee to hire. There are quite a few acquisition costs that some business owners may overlook. For established businesses, it can be easy to lose track of traditional expenses that may continue to pile up while offering less and less value.

Examples of these expenses can be out of date phone systems and tech support contracts. Unless you regularly track and evaluate these expenses you can severely harm your cash flow. Diligently track your one time and recurring expenses so that you always have an up to date picture of where you stand in terms of cash.

  1. Being difficult to pay

Depending on your business, you may have survived for years without accepting credit cards or allowing online payments. Today’s customers have more options than ever in ways to make payments, and if you’re not flexible in how you can be paid you’ll likely scare some potential customers away and end up with a higher percentage of late paying customers. Talk to current and potential customers and ask them how they’d prefer to pay and adjust your business to accommodate them.

  1. Not cracking down on late payments and overdue invoices

Few things will destroy your cash flow and your business as quickly as late paying customers. Many a business has looked successful on paper while they struggled to keep the lights on because their receivables piled up for months. The best way to avoid late payments is by being proactive. There are several strategies businesses can implement to nip this kind of customer behavior in the bud.

  • Demand payment up front (or at least a percentage up front depending on your business).
  • Make late payment penalties clear up front in any estimates or contract that you make customers sign.
  • Invoice customers immediately once you’ve completed the work. If you don’t show some urgency in getting them the invoice, they likely won’t show you any urgency with the payment.
  • Offer incentives for early payments like a small discount
  1. Poor management of taxes

You may not like paying taxes, but they must be paid. Many businesses run into trouble each year by failing to manage their tax situation. Failure to keep up with quarterly estimates, or incorrectly estimating taxes can lead to wild swings in your cash flow or excessive penalties that can ruin a business. Working with a tax professional throughout the year can help you avoid riding the tax rollercoaster. Whatever you do, you’ll want to make sure you don’t leave yourself in a situation where tax time ends up crippling your cash flow.

  1. Not preparing for the least expected

If you don’t know what’s coming, how do you plan for it? While there’s no hard and fast rule for preparing for the unexpected, businesses can certainly benefit from having some type of an emergency fund. It’s important to have an extra stash of money for when the roof needs to be replaced, a major piece of equipment needs to be fixed or someone tries to take you to court. If there isn’t some money set aside types of events could put you out of business.

For the long-term health of your business it’s important to have a clear picture of your current cash flow. Put business processes in place to make sure you maintain a healthy cash flow in the future. If your company has gotten by without addressing the items listed above, you could be playing with fire.

About the Author:


Kim Phillipi
is President and owner of Building Science Academy, LLC. This startup formed in 2009 and operates Greenfit Homes, a construction business, and JobFLEX, an app development company.

Feel free to share...Share on facebook
Facebook
Share on twitter
Twitter
Share on google
Google
Share on linkedin
Linkedin
Share on pinterest
Pinterest
Share on reddit
Reddit
Share on email
Email
Share on print
Print

Filed Under: Cash Flow & Finance, Guest Articles Tagged With: balancing money, cash flow, cash flow and profits

Fix Your Business Now!

Order SmallBizLady's new book Fix Your Business, 90-Day plan to Get Back Your Life and Reduce Chaos in Your Business. It includes the 12 Ps of Running a Successful Business and readers will finish the book with a new strategic plan to take their business to the next level.

About Melinda Emerson

Melinda F. Emerson, “SmallBizLady” is America’s #1 Small Business Expert. She is an internationally renowned keynote speaker on small business development, social selling, and online marketing strategy. As CEO of Quintessence Group, her Philadelphia-based marketing consulting firm serves Fortune 500 brands that target the small business market. Clients include Amazon, Adobe, Verizon, VISA, Google, FedEx, Chase, American Express, The Hartford, and Pitney Bowes. She also has an online school, www.smallbizladyuniversity.com, that teaches people online marketing and how to start and grow a successful small business and publishes a blog SucceedAsYourOwnBoss.com. Her advice is widely read, reaching more than 3 million entrepreneurs each week online. She hosts The Smallbizchat Podcast and is the bestselling author of Become Your Own Boss in 12 Months, Revised and Expanded, and Fix Your Business, a 90 Day Plan to Get Back Your Life and Reduce Chaos in Your Business.

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Let’s Connect

  • facebook
  • instagram
  • tiktok
  • pinterest
  • linkedin
  • twitter
  • youtube
  • feedburner

Sign up for the SmallBizLady BUZZ Newsletter and be the first to receive updates and details about upcoming events:

We’re proud to be part of the Mediaplanet Empowering Small Business campaign! The COVID-19 pandemic brought hardship and ruin on the nation’s small businesses, but there’s now reason for hope. Learn about the resources, support, and tools available to help your small business bounce back and grow stronger than ever by picking up a copy of the campaign in USA Today and reading it online here.

Get a FREE Chapter of SmallBizLady’s Book,
"Become Your Own Boss in 12 Months, Revised and Expanded"!

Become Your Own Boss

Most Popular Posts

>Seven Ways to be More Profitable in Your Small Business
> 7 Ways to Attract Customers to Your Small Business
> 6 Tips for Managing Small Business Finances
> How to Run a Successful Multilevel Marketing Business
> 10 Ways to Grow Your Small Business With Instagram
> How to Sell on Facebook
> How to Get Over the Fear of Starting a New Business

Featured Videos

Bloomberg News Interview
How to Support Small Businesses During the Holidays

National Speakers Association
Winter Conference

Fox 29 Philadelphia
'Small Biz Lady' gives best advice for starting a new business in the New Year

Fox Business
Starting a Business

MSNBC
The importance of job mentoring for women

#SmallBizChat Live
National Small Business Week: Q&A

Good Day Philadelphia
Expert Shares Tips on How to Become Your Own Boss

Testimonials

Become Your Own Boss is a must read if you’re thinking of launching a business of your own.
Jean Chatzky, Bestselling Author of Money 911 and Financial Editor of NBC’s Today Show
Great step-by-step advice for anyone looking to start their own business.
Andrew C. Taylor, Chairman, Enterprise Rent-A-Car
Melinda Emerson has written a remarkable book. It is essential reading for anyone seeking to make the transition from working girl to successfully working it, as an entrepreneur.
Cynthia McClain-Hill, Past President, National Association of Women Business Owners
The perfect companion for those planning to go out on their own. Melinda delivers firsthand practical advice on how to be the successful entrepreneur. Read it if you want to get it right the first time.
Kenneth L. Shropshire, Professor at the Wharton School of Business, University of Pennsylvania
If you are looking for a versatile speaker who can talk about how to grow small businesses or get started with social media, look no further.
Heather Van Sickle Executive Director, National Association for Community College Entrepreneurship (NACCE)
Her wit and depth of subject knowledge were entertaining and empowering. Melinda is definitely on our short list of seasoned entrepreneurs and business leaders we look to invite back in the near future.
Tennille M. Robinson Senior content & Event producer for Inc. magazine
Melinda Emerson, “SmallBizLady,” is an engaging and witty speaker and a great addition to any conference. Her terrific presentation and compelling delivery give people the information they need and want to become their own bosses and grow success… Read more
Laurie Dalton White Conference Director, Pennsylvania Conference for Women
Melinda Emerson has been a fantastic small business and social media resource for the Pitney Bowes team. Not only is she personable and easy to work with, but she also has an innate understanding of the small business audience. My marketing programs … Read more
Justin Amendola, Former VP, Global SMB Digital Strategy, Pitney Bowes

Latest #SmallBizChat

50 Best Free Apps for Small Business Owners

Running a small business requires wearing multiple hats—operations, marketing, finance, customer service, and more. Fortunately, there’s a wide range of free tools that can help you streamline your processes, increase productivity, and save money. Whether you’re a solopreneur or managing a growing team, these 50 best free apps for small business owners are powerful, practical, […]

Fix Your Business Q&A Video

Recent Posts

  • 50 Best Free Apps for Small Business Owners
  • The SmallBizChat Podcast: How to Reinvent a Legacy Business with Rich Trotter
  • May 2025 #SmallBizChat: How to Position Your Brand with Multicultural Markets
  • How to Tighten Your Sales Infrastructure (Before Your Bank Account Screams for Help)
  • The SmallBizChat Podcast: How Giving a TEDx Talk Can Benefit Your Business with Dr. Dan Young

#SmallBizChat

  • SmallBizChat Archive
  • @SmallBizLady

Business Advice

  • How to Start

SmallBizLady Store

Products

Free Chapter

Get In Touch

  • FAQ
  • Be a #SmallBizChat Guest
  • Contact Us
Copyright © 2025
Quintessence Entertainment, Inc
PO Box 280
Drexel Hill, PA 19026
(610) 352-0680
Privacy Policy · Refund Policy

Let’s Connect

  • facebook
  • instagram
  • tiktok
  • pinterest
  • linkedin
  • twitter
  • youtube
  • feedburner