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How To Manage Cash Flow for Small Businesses

Oct 10, 2023
Posted by: Stearns Bank
Small business owner managing cash flow at countertop

Cash flow is vital for small businesses. It shows the money coming in and going out of your business, reflecting your revenue, bills, and growth investments.

But many small business owners struggle with cash flow management. From seasonal changes to unexpected crises, poor cash flow management causes nearly 82% of small businesses to fail.

Fortunately, you can overcome these challenges and boost your cash flow. Keep reading to discover some powerful tips and strategies to manage your cash flow and ensure your business’s financial success.

What Is Cash Flow Management?

Cash flow management is monitoring, analyzing, and optimizing the movement of money in and out of your business. It includes: 

  • Tracking revenue and expenses 
  • Making accurate forecasts and budgets 
  • Balancing income and expenses 
  • Keeping a positive cash flow balance

Positive cash flow means there is more money coming in than going out. This lets you cover costs, repay debts, invest in growth, and build an emergency fund.

Negative cash flow means there is more money going out than coming in. This can cause shortages, affecting bill payments, payroll, customer orders, and opportunities.

Tips for Effective Cash Flow Management

Here are some useful tips and best practices to help optimize your cash flow:

Forecast Finances

Use historical data, market trends, and industry benchmarks to realistically project your revenue and expenses. This helps you plan ahead, foresee cash flow issues or excesses, and modify strategies as needed.

Get a Business Line of Credit

A business line of credit is a flexible financing option that lets you borrow and repay money up to a limit, with interest. It’s ideal for covering temporary cash flow gaps, unforeseen costs, or growth opportunities.

Finance Your Equipment

Financing equipment is a smart way to save cash flow and avoid upfront costs. You can use necessary equipment for a monthly fee without worrying about maintenance, repairs, or depreciation. Plus, you can upgrade or replace equipment as needed, staying current with technology and industry standards.

Streamline Accounts Receivable

Accounts receivable is the money customers owe you for goods or services delivered. To improve cash flow, collect this money quickly and reduce unpaid invoices.

Manage Accounts Payable

Accounts payable is the money you owe suppliers or vendors for goods or services received. To optimize cash flow, negotiate payment terms, pay on time, prioritize payments, and use payment benefits. This can help you maintain better cash flow and financial stability.

Reduce Costs and Increase Efficiency 

Review your income statement regularly to find ways to lower costs and enhance efficiency. Use energy-saving appliances, minimize travel expenses, and outsource non-essential tasks. Get feedback from employees, customers, and partners to learn how to cut costs and improve operations.

Choose the Right Bank and AccountStearns Bank's BusinessSmart comparison tools on a desktop computer

Your bank and account can affect your cash flow. Some banks charge fees for services like transfers or overdrafts, which can reduce your cash flow. To avoid this, compare different banks and accounts to find the best one for your business. If you’re unhappy, consider switching to a different bank or account that meets your needs.

Pro tip: Use the Stearns Bank BusinessSmart Comparison Tools to find out which account gives you the best value for your money. These free, helpful comparison calculators make assessing account possibilities simple.

Build an Emergency Fund 

Save enough money to cover three to six months of operating expenses. This protects you from unexpected costs or emergencies like disasters, pandemics, lawsuits, or loss of customers. An emergency fund gives you peace of mind and confidence to pursue growth and take risks.

Compare Your Merchant Services

Merchant services enable customer payments like cards, mobile wallets, and online payments. Fees for these services vary based on providers, payment methods, transaction amounts, and other factors. These fees affect cash flow and profitability.

How Stearns Bank Can Help You Manage Your Cash Flow

You need a reliable and trusted partner like Stearns Bank to manage your cash flow effectively. We offer a range of products and services to support your cash flow management needs, such as:


A convenient and secure online and mobile banking platform that lets you access and manage your business accounts anytime, anywhere. You can check your balances and transactions, transfer funds, pay bills, deposit checks, and set up alerts and notifications.

StearnsConnect and Autobooks applications on mobile phone


An add-on feature that allows you to send invoices and offer online payment options to your customers, streamlining your accounts receivable process. You can create and send professional invoices, accept various payment methods, track invoice status and history, automate reminders and receipts, and sync with your accounting software.

Customer Service and Support

A team of trusted financial advisors who can provide guidance and assistance in cash flow management. Whether you need help with setting up your accounts, applying for a line of credit, choosing the right equipment financing option, or finding the best merchant service provider, our team is ready to help you achieve your goals.

Cash Flow Management Offerings

Various offerings that can help you optimize your cash flow situation. These offerings include:

  • Business line of credit: A flexible financing option that lets you borrow and repay money up to a limit, with interest.
  • Equipment financing: A smart way to obtain the equipment you need without dipping into your cash reserves. 
  • Merchant services: Services that enable you to accept and process payments from your customers using various methods and platforms.

Stearns Bank also offers multiple types of accounts to suit your needs, such as checking accounts, savings accounts, money market accounts, and certificates of deposit (CDs). We’ll help you compare different features and benefits, such as interest rates, fees, minimum balances, rewards, and more.

Don’t wait any longer. Contact a small business expert at Stearns Bank today and discover how we can help you manage your cash flow effectively.

Business Banking Should Be Simple  Whether it's live support from helpful experts, full online banking  capabilities, or uncomplicated account options, everything you need is in one  place to help you reach your goals. Contact a business banking expert