The worst cash flow mistakes a small business owner can make can be counted on one hand. They have one thing in common, and that’s not following the money trail. It’s all about keeping an eye on the prize, and we review them here, ending with tips on how to track your own business money using small business expense management software…

1. Not thinking before splurging. Excellent! You have started a business. You are on the road to fame and fortune, and now is the time to invest in an expensive suit and a new car, isn’t it? No, in short, it is not. This is exactly the time to NOT commit money, neither yours nor the company’s, to anything you don’t need. There is the first lesson. Understand the difference between ‘want’ and ‘need’. To succeed in business you need a phone, but the Armani suit can wait…
2. Waiting the best. It’s all about your financial planning. He understands that you are not going to be a millionaire in the first year. On the contrary, you will do well if you can afford to pay something close to a salary in the first year. If you overestimate the number of units you can sell, or the customers you can get them to sign on, your revenue will be lower than you predict and you may find yourself overburdened with whatever financing package you’ve put in place.

3. Offering credit. Poor paying providers can cripple small businesses. If they force you to wait for payment, it’s like offering them an interest-free loan, and you shouldn’t. It’s perfectly reasonable to ask for payment up front, as long as you’re willing to honor your commitment. After all, you wouldn’t expect the local supermarket to give you a month or more of credit at their grocery store (although if you’re a supplier to them, the boot would be on the other foot). In general, large organizations are slower to pay and also have complex internal procedures for how and when payments can be made. Better to work with smaller companies, where you have direct access to the person with the power of payment.

4. Being cash poor. If you’ve made careful and conservative cash flow forecasts in the early days of your business, all is well as long as cash moves as planned. But what if it isn’t? If you don’t have a cash cushion, you could be in trouble. Try to have a couple of months of cash in the bank so you can continue if you don’t have any income. It will also help you sleep better.

5. Do not make an unpaid financial assistant work for them. I bet that caught your eye, didn’t it? It’s not about the kind of modern day slavery that makes people work for free, it’s about technology. It’s all about arming yourself with good quality business expense management software for small businesses and being disciplined in using it. In the early days of your business, you should be especially careful with money, because having little of it usually sharpens your focus on the need to be a good money manager. In later years, when you’ve gained a wedge, there’s no reason to take your foot off the control pedal. Keep a tight rein on finances and you will be rewarded with better dividends in the future. Selecting the right small business expense management software will allow you to track expenses very easily, but more importantly, it will allow you to interrogate the data and show you how effectively you are managing expenses and flow. of cash, and show you where the improvements are. It can be made. And choosing the right package means it’s going to be great value for money, because the savings you get from using it will likely outweigh the cost of investing in it in the first place.