5 Ways to Manage Cash Flow and Grow Your Business

By FleetCardsUSA

May 16, 2024

Living month-to-month is a tough way to run a business, yet so many entrepreneurs do.

Cash flow problems are often unpredictable. In the U.S., it’s one of the biggest reasons small businesses fail. In fact, according to SCORE, 82% of small business failures are due to cash flow issues.¹

If you never know when the money’s coming it, it can be incredibly tough to keep your business afloat through normal times, let alone in tough times. Sure, you could save profits from better months to keep you alive during the less lucrative ones — but there’s always a sneaky expense, like a cracked windshield or a transmission failure on one of your vans, hiding around the corner just waiting to wipe out your savings.

Add on an unexpected event like a pandemic, and you have the perfect storm.

To safeguard your business from cash flow issues, it makes sense to have a plan. Experts agree that the following steps are essential to managing your cash flow so that you have enough day-to-day operating cash, a reserve for meeting unexpected needs, and enough resources to support growing your business:

1. Get your billing system in order

For small businesses and self-employed people like owner-operators, unpaid receivables are often at the heart of the cash flow issue. According to a recent study²:

69% say they lose sleep over cash flow concerns
34% say that not getting paid on time by customers is a major cause of cash flow issues
32% struggle to meet their own business financial obligations due to late receivables
31% estimate it takes more than 30 days on average to get paid by customers and clients

Bottom line: you must find a way to get customers and clients to pay on time.

Start with clear and timely communication. You’d be surprised at how many small business owners don’t get around to invoicing clients until weeks after the job is completed. Set aside time at the end of each month for this task. And be sure to clearly note your terms right there on the invoice.

Be clear about credit terms and consequences (charges) for late payments. If you don’t charge interest or a fee for late payments, consider implementing a modest add-on charge that you write into your contracts or scope of work statements.

Automate as much of your billing and payment processing as possible to save time and assure invoice and payment delivery. Says QuickBooks’ John Rampton: “As your business grows in size and complexity, managing open transactions using an automated invoicing software is the best way to protect your profitability and improve your cash flow. When your invoices are integrated with your accounting software, the probability of missing a payment deadline or letting your invoices go stale is minimized.³

Once you have an automated system in place, it’s easy to add bill reminders and overdue notices to the cadence to help prod customers to pay on time.

Having an effective invoicing and payment system not only helps you run your business, but it also trains your customers to prioritize your payments. Who doesn’t like being first in line when it comes to getting paid?

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2. Negotiate the best possible terms for your own debts

We know — that advice is a bit of a double-edged sword. When the roles are reversed, we sure do like having some flexibility with payment dates.

However, as a business, it’s your responsibility to prioritize paying your suppliers on time. What you should focus on instead is negotiating favorable payment terms. If you have a good on-time track record with your suppliers, they may be more willing to give you more flexible terms — and perhaps even a discount — on the money you owe them.

External financing can help here, too. If you know a big payment is coming to you in a week, using your fuel card to pay your mechanic today is totally reasonable. Keeping on good terms with your suppliers and partners is critical to the health of a small business, and credit can help keep those relationships smooth.

3. Leverage your fleet card to stretch your cash

If you operate a small fleet, you’ve got an advantage other SMB owners don’t: You can tap a fuel card to help you pay not just for gas, but also for fleet-related expenses such as repairs and maintenance in many cases. Using a fuel card can restore some order to your operational cash flow, but it does require balance. And it requires a fuel card that includes repair and maintenance as part of the package.

Fuel cards can offset some urgent expenditures, but even the most understanding and flexible of lenders come a-calling sometime. You’ll need to be able to project when your money is coming in so that you can manage your debts effectively. Without a clear picture of your financial situation, using any kind of credit to float your business expenses can be risky.

4. Optimize fleet expenses

A corporate fuel card isn’t only an extension of your budget. It can also get you discounts on routine expenditures like fuel, tolls and maintenance. Even if individual rebates feel small on their own, they really do add up over time. As a small business owner, you know very well the importance of taking whatever breaks you can get.

It may be tempting to postpone routine vehicle service and non-emergency repairs. Don’t. Respecting a maintenance schedule is important when your business depends on a fleet. If you push a vehicle until it breaks, the expense is almost guaranteed to be monumental. Doing your oil and brake changes when you’re supposed to really can help fend off unpleasant surprises. As an organizational tool, consider using your fleet card as the dedicated channel for managing all fleet-related expenses.

Besides helping you keep your fleet in tip-top shape, a fuel card program provides crucial data to help manage your business. With a fuel card you can control, manage, and track fuel expenses across multiple vehicles and drivers. It will also help your business prevent fraud and misuse by allowing you to customize fuel purchase controls. You’ll get all-n-one fuel expense tracking, eliminating the need to manage cash, checks, and paper receipts.

5. Plan ahead for big bills

Of course, there’s only so much a fuel card can do. You still need to develop a strategy to manage major planned expenses, like the purchase of a new vehicle or expanding your business. Doing this well takes time. Advanced planning gives you the flexibility you need to save up, move money around, and — most importantly — plan for your future.

If your current fuel card isn’t giving you what you need, check out FleetCardsUSA’s Recommendation Engine and find the card that best fits your fleet.

1Sutter, Brian. ”The #1 Reason Small Businesses Fail – And How to Avoid It.” SCORE.org. 1 September 2023. www.score.org/blog/1-reason-small-businesses-fail-and-how-avoid-it. Accessed November 13, 2023. [JA1]

2Intuit. QuickBooks Study: Cash Flow Woes Mean a Third of Small Businesses Can’t Make Payroll, Pay Bills. 6 February 2019. https://www.intuit.com/company/press-room/press-releases/2019/quickbooks-study-cash-flow-woes-mean-a-third-of-small-businesses-can-t-make-payroll-pay-bills/[JA2]

3Intuit. How to speed up payments: 20 tips to get clients to pay their bills and invoices faster. 28 June 2022. https://quickbooks.intuit.com/r/payments/20-ways-to-get-clients-to-pay-their-bills-and-invoices-faster/[JA3]

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