5 ways to manage unpredictable cash flow

4 min read

Cash flow problems are the leading cause of small business failure. Specifically, 82% of small businesses fail because of insufficient cash flow. And insufficient in this case can simply mean a bad period where several of your incoming payments are late while your own invoices are due.

Unfortunately, unpredictable cash flow is often a necessary evil of small business life, especially if you’re just starting out. But it’s not impossible to overcome that challenge. Far from it. Find out how you can prevent unpredictable cash flow from ruining your business.

Create a budget

Creating a budget is useful in many ways. It helps you to get a grasp on your financial needs, divide assets between your goals, and create a clear picture of the way forward.

Include everything into your budget, like salaries, insurance, office expenses (if you have any), costs of products, storage, shipping, and overhead. Don’t forget to set aside a sum as a reserve to fall back on, should you get into a temporary cash flow shortage.

Remember that your budget isn’t set in stone. Check on it regularly (e.g. every month), and see how real life measures up to your predictions. If you need to, adjust your budget according to your changing situation.

Keep track of your cash flow

You’ve issued an invoice to a business partner for a large sum? Well done! However, you can’t start spending that money until you actually receive it.

A common mistake is to confuse your accounts receivable with money in the bank. The accounts receivable is actually a promise of money in the bank. But when and if that promise is fulfilled, that’s another question.flu

That’s why it’s important to make note of both your outgoing invoices and the date they’re expected to be paid. On top of that, you need to know the actual money you have in the bank at any given time.

Relax, that doesn’t mean you have to memorize your accounting ledgers as well as the contents of your business bank account. It’s quite enough to have a good accounting software that keeps track of all your finances.

Forecast your cash flow needs

As an added bonus, an accounting software can help you with forecasting your cash flow needs as well. Why is it important? Because forecasting is your best guess at making unpredictable cash flow predictable.

How to create an accurate forecast? Go over your books for the past few years (if you’ve been in business for that long), and try to detect trends. Depending on the nature of your business or industry, you may see very different results.

Do sales slow down in Q1 (January – March) after the holiday season? Do you experience a rising demand around the summer months? Is business picking up in Q4 (October – December), especially after Black Friday?

Once you have your trends, you can start forecasting. If you usually experience a dry spell in Q1, you can assume that it’s going to happen again next year. Why not prepare for it with some extra cash? That way you won’t get stuck even if a payment falls through.

Avoid late payments

On that note, try to avoid late payments as much as possible. Waiting for your payments can be very stressful and even damaging for your business, especially if you’re counting on that money to pay your own bills (and who doesn’t?).

Late payments can occur for a multitude of reasons. Your invoice got lost, the check is stuck at the post office, the wire transfer went astray, your business partner is in a financial jam, or they just forgot about paying you entirely. Whatever the reason, you’re tasked with an unpleasant activity: chasing your payment.

Luckily, there are ways to minimize late payments, if not entirely eliminate them. For example, offer your business partner the most convenient ways to pay you. Sending an online payment with a few simple clicks takes up a lot less time than writing a check, going to the post office, and mailing it.

If you use Veem, you can create an invoice and send it to your business partner or employer with just a few clicks. Also, you may include a personal paylink in any of your invoices, emails, or other communications that make it even easier for your them to pay you.

But the best thing is the payment reminders. Veem sends regular reminders to your business partner to pay you. You can say goodbye to chasing payments and say hello to, well, your hard-earned money.

See how Veem can make your business payments simple.


Get working capital

Sometimes simply saving money is not enough. If growing your small business requires a fast and large injection of capital, or all your outstanding payments fall through and you need a lot of cash by yesterday, you may have to turn to external sources.

Luckily, financial technology (fintech) has got your back. Gone are the days of slow small business bank loans that may or may not get approved. Today, there are several financing options you can explore if you need cash, fast. Crowdfunding, invoice factoring, or lines of credit and much more are all viable financing options open to small businesses in need of capital.


Unpredictable cash flow is not a force of nature, and certainly not something you just have to accept. Get organized, pay attention to cash flow trends, budget for dry spells, and apply for working capital to minimize the impact unpredictable cash flow can have on your small business.

Simplify your business payments with Veem.

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