The SMEgo Guide to Good Cash Flow Management

Updated on 12 April 2024

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The SMEgo Guide To Good Cash Flow Management

Managing cash flow effectively is crucial for the survival and success of any business. A healthy cash flow allows you to meet your financial obligations, seize opportunities, and invest in growth. Good cash flow management means having enough money to pay bills and handle financial challenges. Fortunately, optimising the cash flow of your SME isn’t rocket science. By following the guidelines below and leveraging the power of a reliable business management platform, like SMEgo from Old Mutual, cash flow can easily be transformed from a major source of concern into a business success enabler.

Understanding Cash Flow

Cash flow is the money coming in and going out of your business. Here’s a breakdown of the two key components of cash flow:

  • Cash Inflows: This includes revenue from sales, customer payments, investments, and any other sources that bring money into your business.
  • Cash Outflows: This encompasses all your business expenses, including rent, salaries, inventory purchases, loan repayments, and taxes.

Positive cash flow means you consistently have more money coming in than going out and it’s important to achieve that positive cash flow status for a number of reasons:

  • It ensures business continuity: Having enough cash on hand allows you to pay your bills, meet payroll, and cover unexpected expenses. This keeps your business running smoothly and avoids disruptions.
  • It fuels growth: Positive cash flow allows you to reinvest in your business, like expanding your inventory, hiring new staff, or pursuing marketing initiatives, and improves your chances for getting approved for funding.
  • It improves decision-making: Having a positive cash flow gives you the freedom to make good choices and take business-building actions. You’’ll know when to take on debt, negotiate better terms with suppliers, or adjust your pricing strategy.
  • It reduces your stress: Managing your cash flow well gives you peace of mind and lets you concentrate on growing your business without financial worries.

Six valuable cash flow habits to help grow your business

  1. Keep careful track of your money: Use good accounting software or a well-designed digital business management platform, like SMEgo, to record all the money you earn and spend. Categorise your expenses to identify areas for cost-cutting.
  2. Embrace financial forecasting: Make it a habit to regularly invest some time creating financial forecasts to predict future cash flow. This empowers you to anticipate potential shortfalls and adjust as necessary.
  3. Prioritise timely invoicing: Issue invoices promptly upon completing a job or delivering goods. This is where a digital platform like SMEgo can make your life much easier thanks to its on-the-go invoicing features that include instantly converting quotes to invoices, automating repeat bills, and even accepting customer payments securely online. You can also offer early payment discounts to incentivise faster payments from customers.
  4. Manage customer payments effectively: Implement a clear credit control policy with defined payment terms and late payment penalties. It’s a good idea to automate this process too, for instance by setting up payment reminders as invoice due dates approach – another handy feature you’ll find on SMEgo.
  5. Optimise your inventory management: If you carry stock, maintain optimal stock levels to avoid excessive storage costs and stockouts that can disrupt sales.
  6. Renegotiate supplier terms: Negotiate extended payment terms with suppliers if possible. By holding money in your business for a longer time before making payment, you benefit from interest growth and a stronger cash flow position.

Old Mutual SMEgo: Optimise cash flow and manage and grow your business on the go

SMEgo is an all-in-one, convenient and affordable digital solution designed to streamline and simplify the daily challenges of running a small or medium-sized business. This user-friendly platform not only helps you manage the various aspects of your enterprise seamlessly but also enables you to optimise your cash flow, ensuring your business thrives.

With SMEgo, doing daily tasks is easier than ever, leaving you the time you need to focus on what matters most – growing your business by delivering exceptional products and services. Here are just some of the business-building features you get when you sign up for one of the cost-effective SMEgo plans:

  • Streamlined order to sales processes – Effortlessly create and send professional quotes, invoices, statements, purchase orders, delivery notes, and credit notes, eliminating errors and delays. You can also send all these documents via WhatsApp, which means you don’t need to head back to the office to do your admin.
  • Automated payment reminders – Reduce the risk of late payments by setting up customised, automated payment reminders that are sent directly to your customers.
  • Recurring invoices: Schedule weekly or monthly recurring invoices to regular or repeat customers.
  • Easy income & expense tracking: Link your bank accounts on SMEgo to categorise income and expense transactions automatically, saving you time and effort on reconciliation and allowing you to keep your finger on the pulse of your cash flow.
  • Easy payment reconciliation: Record partial or full payments with a tap or click. Invoice statuses are automatically updated on SMEgo, so you have a clear picture of all customer payments.
  • Access flexible funding – Apply to multiple funders, for various types of business funding, with a single application.
  • Protect your business assets – Cover your key business assets for theft, loss, or damage with an affordable, packaged insurance solution from Insure for Business.
  • Access markets and customers – SMEgo eMarket – a dynamic online space where thousands of SMEs come to buy and sell goods.
  • Do it all on the go – Access SMEgo.co.za from any internet connected PC or download the SMEgo App to your Apple or Android mobile device to have quick and secure access to all the SMEgo features on the go.

Take charge of your cash flow and grow your business today, with SMEgo. Packages available from just R99 per month.

Visit SMEgo for more information or watch this YouTube video. Then download the SMEgo app and start growing your business like a boss.

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