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The Importance of Cash Flow & Our #1 Tip For Improving It



The Importance of Cash Flow & Our #1 Tip For Improving It

Cash flow is one of the four levers that need to be mastered in order to build a successful high-performing trades business. For something so simple, cash flow is one of the hardest things for many business owners to manage (confession: I was one of them who got it wrong too!) but it can also have the biggest impact upon your success, especially if it’s not being managed well.

So, what is cash flow, why is it so important, and what can you do to make it better?

Put very simply, cash flow is the movement of money in and out of your business. Money comes in when customers pay for the work you’ve done for them, and it goes out to pay for the things you need to run your business.

Cash flow is important because you need money to pay to keep your business running. If cash flow is positive, it means invoices are being paid on time and you have enough money coming in (from customers) to pay your outgoings. On the flip side, if customers don’t pay on time cash flow will be bad and you won’t be able to pay your own bills. It doesn’t matter how hard you’re working and how much you’re billing each month, if invoices aren’t getting paid and there’s no money coming in you won’t survive very long - suppliers will put you on stop-credit, new jobs will stop coming in because you won’t have the materials you need to do them, and paying your staff will become increasingly difficult too… It’s a harsh reality, but a real one - something I learned myself on the road to success.

I read this saying somewhere a few years ago which rings true: “The pen is mightier than the sword. The soldiers fight the war but politicians win the war when the other side signs submission.”  That’s a lot of gobbledygook and it probably doesn’t make much sense so let me rephrase it in layman’s terms: in any business, the only lever that releases cashflow is when the data is entered and the invoice is sent. Until then, any work you might have done is worthless. Yep, let me say that again: the work is worthless until the invoice is sent. The recurring cash flow problem I had in my business stemmed from this issue, and I know plenty of others who have been in this position too.

So, if cash flow is a problem and you need to make some changes fast, my number one tip is to get invoicing!

Invoicing daily is vital to maintaining positive cash flow and it should be one of your main priorities.

If you’re slow getting the invoice out to the customer you can bet they will be slow in paying it, which is bad news for cash flow. Getting the right systems and processes in place to make it happen isn’t always easy but the effort is worth it and the impact will be huge, I promise!

Getting the right systems and processes in place to make it happen is the key. It isn’t always easy, but the effort is worth it and the impact will be huge, I promise. For inspiration on effective invoicing processes, check out our tips on how to invoice like a pro.


To find out more about how Fergus job management software can help you improve cash flow, check out the full range of features available here.

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