SMB hacks for improving cash flow

Managing cash flow. As an SMB owner, those three words may seem daunting at first, and we don’t blame you. Research shows 64% of Canadian small business owners are burdened with cash flow issues. If you can efficiently manage your cash flow, you will have much more available capital to play with. This comes with several benefits such as expanding your business activities, hiring staff, and keeping up with current projects. The following hacks will help SMB owners move their business in the right direction.

The Basics

What exactly is cash flow? Cash flow can be best described as the net amount of cash and cash equivalents being transferred in and out of a company. A positive cash flow means more money is coming in than going out. With a healthy cash flow, you will be able to operate your business comfortably and most importantly, make a profit! But how exactly do you go about improving cash flow?

First Things First

To improve cash flow, you must first understand its movement. With a cash flow statement, you will be able to draw meaningful conclusions about the current state of your business. A cash flow statement is generally shown on a monthly basis and consists of three main sections: operating activities, investing activities and financing activities. Hundreds of excel templates can be found online where you can input your business data yourself. Due to its ease of use, we suggest using BDC’s free to use cash flow statement template. As an alternative, you can download accounting software that will generate a cash flow statement for you. BDC has conveniently created a detailed list of free and low-cost accounting software that you can start using today. If you plan on doing it yourself, an indirect or direct method of accounting can be used to arrive to the same conclusions. Yet, the indirect method is much more widely used and known in the accounting world. Equipped with a cash flow statement, you now have a detailed picture of what happened to your cash during a specific period.

Cash Flow Hacks

1. Expenses and Inventory

Once you’ve completed and analyzed your cash flow statement, you’re now in a better position to determine if you can cut down on some expenses. Ask yourself if certain expenses are necessary and if cheaper alternatives exist. As for inventory, this is an area that can drastically impact your cash flow. Some SMBs tend to keep old inventory for too long. Avoid this, and instead liquidate your inventory to get some cash flowing into your business. You should also focus your orders on products that are selling fast and trim down on products that aren’t. Understanding your sales pattern is key to managing your inventory and cash flow efficiently.

2. Involve your Customers

You don’t have to manage your cash flow alone – get your customers involved! Sell vouchers or gift cards so that you can pocket the cash right away and put it to work. They’re a great way to promote your business and to keep your cash flowing. You can also offer discounts to customers who pay bills ahead of time. Discounts will often translate into more sales, which can generate more profit. Finally, make it easy for your customers to pay you. Offer your customers various payment methods so that you never miss a sale opportunity. Buy Now, Pay Later (BNPL) services are currently gaining traction in Canada. They allow consumers to purchase goods or services immediately and to pay them out into equal, smaller installments in the future. Compared to traditional loans, BNPLs are great for SMBs since they can be used for a much broader and less expensive range of products and services.

3. Hiring a Bookkeeper

We get it – as a small business owner you’re being pulled in several directions and you might not have the time to manage your cash flow the way you would want to. If this is the case, then you may want to consider hiring a bookkeeper. Bookkeepers can be extremely valuable in helping you run your business and can take a lot of work off your plate. Beyond managing your cash flow, they can also provide you with financial advice, lower your taxes, and much more! Doing everything yourself may save you money, but you may end up making mistakes that will cost you more in the long run. List out the pros and cons of having a bookkeeper and make an informed decision from there.

4. Keeping up with Inflation

Increasing prices is a concept that scares many small business owners. We understand – you’re worried that your customers will bring their business elsewhere. In most cases, that’s simply not true, and you might be selling yourself short as a result. With inflation rates in Canada reaching record highs of 4.4 and forecasted to increase well into the New Year, it’s important for your business to adjust its prices to account for these increased costs brought on by the pandemic. Research also shows that most Canadians are willing to pay a premium for local and sustainable goods. In fact, 63% of Canadians feel the COVID-19 pandemic has made them more environmentally conscious. If your brand has fostered brand loyalty and is focusing on being sustainable – you’re in an excellent position to retain your clientele.  Have a look at our previous blog where we discussed strategies to Make your SMB Sustainable. In the end, be honest with yourself and your business. It’s okay to experiment with prices. If your customers are loyal and are on-board with your mission, they will follow you.

5. Saving for the Future

You should treat your business financing the same way you would treat your personal financing. As an SMB, it’s wise to keep a cushion of at least 3 to 6 months of operating expenses to cover any unexpected costs that your business might incur. Even better, store those savings in a high interest business savings account where you can earn lucrative returns. With extra cash in your back pocket, you will be equipped to take on any emergencies that may arise.

6. Small Business Loans

Finally, another great option to improve your cash flow is with a small business loan. Loans can be tailored to your business needs and can provide you with the funds needed to take on unexpected costs, stock up on inventory, and help drive your business forward. You can find loan options on our website at

The Bottom Line

There is no single answer or approach to increasing cash flow, often it’s a combination of practices that result in improvement.  With cash flow statements, you will be empowered to make any necessary changes to your business’s operational plan. Depending on your type of business, these strategies will change overtime and you will have to focus your attention on the ones that have the biggest impact. In the end, regardless of who manages your cash flow, it needs to be done if your business is to succeed in the long-term.