How To Manage Your Cash Flow For Your Startup

Philip Campbell, author of Never Run Out of Cash says,“Despite the fact that cash is the lifeblood of a business – the fuel that keeps the engine running – most business owners don’t truly have a handle on their cash flow.”

Most of the young and passionate owners undermine the importance of cash flow in their startups and end up going out of business. This curious case of missing cash flow is especially prevalent among bootstrapped startups.

No matter how great your business idea is or you have all the ingredients for a perfect startup; if you constantly ignore the flow of your cash then you are most certainly digging the grave for your startup.

Here are 6 essential tips to maintain the cash flow for your startup:

Don’t delay the payments

You have to take payment from your customers for the services offered as soon as possible. With the help of enticing discounts, in the beginning, you can lure your customers for pre-payment and also build a loyal customer base for your company.

Automated Clearing House or credit card payments is also one way to go about it. Timely payments allow you to systematically manage your accounts and predict your cash flows as well.

Always keep a track of the invoices

You can never afford to delay in dispatching invoices. Late invoices can prove to suicidal because practically you are yourself asking for late payments.

You must also keep a track of all the outstanding invoices. Online services like ZenCash are of great help in maintaining outstanding invoices.

Curtail the number of free trials

Many startups offer free services or trials in the beginning. They believe that they will recover these costs over the years and this will make customers stick to them.

It may be true but don’t be delusional. You won’t have any startup or customers left if you run out of cash. Always ensure that you have a payback period of fewer than six months or so.

Think twice before spending each penny

Yes, a certain stall at that event or an advertisement might be really good for your startup. You are really confident about the returns. You have made a rough estimation of all the costs. No! That’s not enough.

Many young entrepreneurs end up spending all their savings or funding this way. Don’t let your passion take over your senses. Each and every penny matters when it comes to your startup.


Most certainly, you need to spend your money carefully. But you must never hesitate to take the help of a professional to chalk out your budget. You don’t need a full-time CFO in the beginning but taking one’s advice from time to time can prove to be really fruitful in the long run.

Systematic inventory management

Proper inventory management is a must for all the young startups. All you need is a simple economic order quantity model for the same. You can also take the help of many banks that offer inventory financing these days. One can also access EOQ templates for most businesses online.

Maintaining cash flow might not have been on the list of your startup ‘fantasies’ and goals. But it’s that one thing which is must in order to fulfil all other dreams which you have for your startup in mind for years.

Bizztor Editors

Bizztor Editors.

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