Tight Money: The Cash Flow Guide

First goal in the quest to being a #MoneyMakingMogul? Master your cash flow.

How you handle your cash flow could make or break your business. But if you aren’t sure exactly what “cash flow” means, this guide is where to get started. Before we reached out to the financial whizzes at Standard Chartered Bank Kenya and they broke it down for us, we didn’t know what business cash flow was either.

Get you this guide to understand the importance of mastering your business’s cash flow.

Topics this guide will cover:

  • What is cash flow?
  • What are the stages of the cash flow cycle?
  • What do you do if you can’t pay all your creditors on time?

Can we get an amen on the last point though? Better get your hands on this guide before your creditors go all Rihanna circa BBHMM on you and your business.


This guide will get you started on managing your cash flow. Once you’re done with it, check out the next guide in the series for a downloadable cash flow analysis sheet. Don’t forget to read up on when to time your cash flow!

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Show Me The Money: The Cash Flow Guide

Balance and position…your cash flow of course 😉

Now you know what the cash flow is and understand the intricacies of the whole process, so what next? Strategies to manage it of course. In this guide brought to you by Standard Chartered Bank Kenya, we’ll reveal strategies for managing your cash flow.

After reading this guide, you’ll be top of your game at showing the money to your business.

Topics this guide will cover:

  • Cash flow management strategies,
  • How to keep the cash flowing and
  • How to determine your cash flow position.

There’s a bonus for you in this guide; a printable cash flow analysis statement that will help you take charge of your monthly cash flow. We hope, no we’re sure, that after going through this series you’ll never have another emergency “this business has no funds” meeting.

Getting access to this guide is easy: just fill out the form below to join our community and get access to this guide, as well as AWESOME weekly content.


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A stitch in time: The importance of timing in managing business cash flow

#MotherlandMoguls be aware that poor cash flow management could ruin your business Click To Tweet

A stitch in time saves nine…whoever said that was right. The saying is a warning against procrastination. Putting off doing important stuff until it is more convenient is never a great strategy in personal life and especially in business.

When it comes to your business, it needs to have a minimum amount of cash to remain afloat. Maintaining liquidity requires intentional effort and coordination to ensure that you meet this requirement.

Poor cash flow management has been known to floor businesses. At the root of the famous Enron scandal was the management of cash flow. That is why #MotherlandMoguls who are their own #Bosses need to pay attention to it.

Managing your business cash flow

There are three major warning signs you need to pay attention to when managing your cash;

  • Slow Collection: When your sales are not moving as fast as you expected them to or you are not making sales at all.
  • Excessive short-term debt: “Short term” usually refers to debt that is due in 90 days or less. The larger this figure is, the higher the chances that your business is cash strapped.
  • Overtrading: Making sales is a good thing; the problem is having more credit sales which means that the cash your business should have is stuck with your customers.

Sometimes what happens is that businesses ignore some warning signs and fail to respond to them on time which leads to bigger problems. One of the most important things to do here is to monitor and coordinate when money comes in and when it goes out. The moment you recognise a situation that is likely to put your business at cash flow risk, deal with it at the earliest opportunity. This is one of the lessons that Julia learned.

Timing is everything when it comes to managing cash in a business Click To Tweet

A business at standstill

We met Julia in one of our Financial Education workshops. Julia runs a small milk delivery business and she was having a few challenges with her cash flow. A majority of her customers bought her milk on credit which she let them have for a period that was not specified.

When we met her, her main problem was that she was not able to pay her milk suppliers because she didn’t have enough cash on her. Some of her customers owed her for more than two months and the fact that she could not pay for the milk meant that her business was at a standstill. Julia also rents a storage unit where she stocks up her milk; she was in arrears for one month and was about to throw in the towel when we met her.

Lessons from Julia

Timing is everything when it comes to managing cash in a business, you must be sure about the dates when major payments (out and into the business) are expected and when. Some of the tips we gave Julia for her business were:

  • First to consider taking a loan as she tries to stabilise her cash position
  • Not to rely on her sales to make basic payments such as rent and wages since Julia might not always meet her sales targets. Rather she should have savings that she can dip in when the going gets tough. This savings can be built slowly over time when business is good.
  • Not to order excess milk if she doesn’t think she can sell it.
  • To compare the credit terms of different suppliers and pick the one that works best to her advantage.
One way to ensure money moves through your business is by saving up to make basic payments Click To Tweet

A couple of months later, Julia who had decided to continue her business reported that her business was doing much better as she had found another supplier who had better credit terms. She also instituted stricter credit terms with her customers.

If your business is cash-strapped consider taking on some of the tips we have given and you just might end up with a smile on your face like Julia did.

Cash is King, don’t ever ignore it

standard chartered bank she leads africa
A #MotherlandMogul who underestimates the power of money sets herself up for failure Click To Tweet

Phones are ringing, orders are streaming in and your sales department is a beehive of activities. Your business is doing well, the mood is ecstatic. The store person walks to you and breaks unpleasant news, stocks are exhausted. You quickly ring your suppliers and each supplier, as if choreographed responds, “We can’t supply till you pay the outstanding amounts”.

You call your accountant and ask her how much money the business has. She says there is very little cash, but quickly assures you that there are receivables which if you collect; the business will have more than enough money to buy stocks. You ask your assistant to call all the debtors and collect outstanding money. Meanwhile, you call the bank, for quick working capital. In your mind, either of these two must come through for you.

By end of day, you call your bff to explain you have no money to buy stocks and you have lots of orders pending. She does not have any cash either; all orders for that day are delayed.

The next day is no better, and customers start asking for alternatives, to which you direct them to your competitors. It is a sad state of affairs and each passing day, the mood in your business dampens, and activities slowly grind to a halt. Where did I go wrong? you ask yourself; with no answers.

Many times we hear an investor say, I will make loads of cash from this idea, so let me put in all the money that I have. Yet she doesn’t consider the day to day cash needed to sustain the business and her life. Such a #MotherlandMogul who underestimates the power of money sets herself up for failure. Money dictates the pace of growth for our businesses, and also the pace of progress of our lives. The absence of money brings business to a standstill and slows our lives down.

Planning cash flows is tantamount to respecting the King. Cash must circulate in your business, from your financiers and customers, to be used for purchasing inventory or stocks, investing, paying for labour and some lying around in a bank account to handle emergencies.

All these activities are so important for your business survival, neglecting any of them, or leaving it to chance is a quick way of muzzling your business to death. In this series of articles and guides, we are going to breakdown cash flow management’s concepts to help you manage your King in a way in which he will flow, without any turbulence, and provide your business with the much-needed growth.

Learn the basics of cash flow analysis with @SheLeadsAfrica & @StanChartKE #MoneyMakingMogul Click To Tweet

Tight Money (Guide)

The cash flow cycle explains the physical flow of money in your business, from the moment you receive it, through utilising it to pay for your expenses, all the way to banking and using it to produce goods and services.

cash flow management strategies
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Show Me The Money (Guide)

We then delve into the best time-tested strategies for managing cash. Here, we discuss how much money you need to have idle around your business waiting to be spent, what you need to do to manage suppliers and the people who owe you, when to turn to debt and when to dispose your inventories, even if it is at a loss.

cash flow cycle guide
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A stitch in time… (Article)

Timing your cash flows to coincide with your outflows is quite a serious strategy in the process of managing cash. It is important that your big expenses are undertaken when you are expecting your big payments from your customers or an inflow from your financier, be it a loan or a grant, or an injection of capital.

Read up on how to time your cash flow here.

Cash in itself can be an investment. That means by having liquid cash, you can keep it in a form in which it earns interest instead of keeping it under your mattress. Money can be invested to earn a return while waiting to be used in the business. Concepts around managing liquidity, investing excess cash, earning or paying interest and banking will be discussed in our last article on cash flow management.

Cash is King. No queen ignores the king. If a #MotherlandMogul ignores the King, it can only be to her own detriment.