How to Fix Cash Flow Challenges Before Your Business Starts Stinking

Ah, cash flow—the business world’s necessary evil. It’s about as exciting as watching paint dry, and yet, if you ignore it, your business will start stinking faster than a gym bag left in a hot car.

Think of cash flow like your daily shower. You could have the best hygiene record in town, but the moment you start skipping showers, people notice. The same goes for your business finances. Stop managing your cash flow, and suddenly, suppliers dodge your calls, the ATO sends you ‘friendly’ reminders, and that European holiday turns into a weekend camping trip—again.

With rising costs, fierce competition, labour shortages, and changing customer payment profiles, keeping your cash flow fresh is tough. But don’t worry—we’ve got the soap and scrub brush you need to clean up your act.

Is That a Cash-Flow Smell? Identifying the Problem

Cash-flow problems don’t pop up overnight; they creep in slowly—like skipping showers one day at a time until even your dog starts avoiding you. Before you can fix the issue, you need to figure out what’s causing the stench.

There are two main types of cash-flow challenges:

Cash resources – This is the total amount of cash your business has on hand.
Cash flow – This is how quickly cash moves in and out of your business.

A good analogy? Your body’s blood circulation. The total amount of blood in your body is your cash resources, and how efficiently it pumps through your system is your cash flow. Let it slow down, and things get real bad, real fast. So, is your real problem the flow of cash, or do you maybe not have enough cash in the first place?

Read: Is Your Accountant Holding Your Business Back?

Time for a Deep Clean: Fixing Your Cash-Flow Challenges

Now that we know where the smell is coming from, let’s talk about how to fix it. Depending on whether your problem lies in the profit and loss statement (P&L) or balance sheet, you’ll need different solutions.

The Quick Scrub: P&L Fixes to Keep Cash Flowing

If your issue is in the P&L, your cash is getting clogged up in daily operations. Time to grab some financial deodorant and freshen up:

Defer expenses: Can you stretch payments to suppliers without causing drama?
Reduce expenses: Are you spending money on things you don’t actually need?
Bring forward revenue: Can you invoice sooner or get deposits upfront?
Increase revenue: Could you charge more, sell more, or launch something new?

Another major culprit? A sluggish cash cycle. Speeding things up will keep your business smelling fresh:

Faster invoicing: Don’t wait—send those invoices pronto.
Better collections: Chase late payments like your business depends on it (because it does!).
Optimise production timing: Don’t tie up cash in unnecessary inventory.
Negotiate supplier terms: Push for longer payment deadlines.

These tweaks help cash to flow smoothly, keeping your business from financial funk.

Deep Clean Mode: Balance Sheet Solutions for Stronger Reserves

If your balance sheet is the problem, your business lacks the cash cushion it needs. This calls for a serious detox:

Defer big spending: Can you push back non-essential purchases?
Cut unnecessary costs: What can you go without impacting growth?
Raise debt capital: Is a loan or line of credit a smart move?
Raise equity capital: Could investors help fill the cash gap and is it the right solution in your circumstances?

Fixing balance sheet issues isn’t easy, but it’s necessary. After all, no one wants to be the business equivalent of a teenager with a week-old gym sock problem.

Learn how BridgePoint Group can help your business sustain a healthy clash-flow.

Keep the Freshness: Making Cash-Flow Fixes a Habit

The biggest mistake businesses make? Fixing cash flow once and then forgetting about it. That’s like showering for a week and then deciding, ‘Eh, I’m good forever.’ Spoiler: you’re not.

Here’s how to keep things smelling like success:

Check cash flow daily: Don’t wait until it’s too late.
Automate invoicing and collections: The easier, the better.
Review expenses regularly: Cut waste before it piles up.
Negotiate smarter deals: A little flexibility can go a long way.
Plan ahead: Forecast cash flow and prepare for surprises.

A healthy cash flow means peace of mind, stability, and no more awkward supplier phone calls. It’s the difference between confidently growing your business and scrambling to keep the lights on.

Case Study| Dynamic cash flow visibility: how to turn uncertainty into financial predictability

Final Rinse: Time to Take Action

Managing cash flow isn’t glamorous, but neither is financial stress. Stay on top of it, and your business stays fresh, thriving, and odour-free. Neglect it, and, well… let’s just say no one wants to be around a business that stinks.

So, grab the metaphorical soap and start scrubbing your finances clean. Your future self (and your accountant) will thank you.