Understanding and managing the cash flow of small organisations is a process overlooked or ignored far too often. In a small business, the bank account can be run very ‘close to the bone’ and it’s too easy to forget about that looming tax bill or overdo the credit of suppliers eager to make sales.  For charities, particularly in the early days, there might be a revenue grant which covers core costs – no problem, right? But when does this mythical grant come in? Will it be evenly split over the year? Do you have to incur costs first, then claim the money?

With cash flow, timing is everything.

When Denise O’Berry conducted a survey of more than 200 small business owners, the overarching theme was the need to learn more about cash flow [1]. For many running a business, the old adage is still the best:

Turnover is vanity

Profit is sanity

Cash is reality

Or more simply; Cash is King.

Everyone loves a horror story. We would never mention our own clients’ shortcomings (they have great accountants) but we are aware of an established business which was not in the habit of producing a rolling cash flow forecast and was able to produce the following panic-inducing set of figures recently:

Annual Turnover                               ~£1,000,000  

Annual Profit after Tax                      ~£150,000

Average Cash in the Bank                 ~£200,000

Cash in the Bank Last Month             ……..£326 (and no overdraft)

To get a handle on the shape of your business from a cash flow perspective, you need a good accounting system, and reliable forecasting. These days, both can be supported by low-cost digital products.

There are plenty of options for accounting software available to small businesses, sole traders and charities. As Sage Gold partners, we recommend adopting a cloud-based solution such as Sage Business Cloud. To get you started, we are offering free licenses for Sage Accounting Start (normally £10 + VAT/ month), sign up for one here.

Free cloud based accounting software for small business and charities

The future of efficient cash flow management is digital. With cloud accounting software as your financial platform, you can use the data in your books to drive your cash flow forecasts and get far more accurate predictions as a result. Modern cash flow solutions like Fluidly integrate with your cloud accounts to use these as the underlying data for a forecast. Utilising the power of AI, this software helps businesses to boost their bank balance through intelligent credit control, debtor CRM, automated scheduling and much more.

Fluidly predicts cash collections from invoices and spots cash crunches to provide a glance into your financial future. For instance, by raising prices you increase cash coming into the business. Forecasting models variables like this so that you can change the price or payroll spend and see the real-time impact on the forecast. As a result, you have an extra level of confidence in your cash flow and business decision-making that allows you to focus your attention on strategic planning.

To learn more about our accountancy service for small businesses and third sector organisations in Glasgow, call 0141 334 1318 or email us at hello@bnassociates.co.uk


[1] Denise O’Berry, Small Business Cash Flow: Strategies for Making Your Business a Financial Success (New Jersey: John Wiley & Sons), 2010.