How to Fix Cash Flow Problems in a Small Business (Without Cutting Corners)
- KG Accounting
- Jul 15
- 4 min read
If you’re a small business owner who’s ever asked, “Why am I making money, but still short on cash?,” you’re not alone. Cash flow problems are one of the most common and frustrating challenges entrepreneurs face, and they’re also one of the top reasons small businesses fail.
But here’s the good news: cash flow issues are fixable, and they don’t require slashing your budget or panicking over every expense. With a few strategic changes, you can take control of your finances and build a business that’s sustainable and profitable. Learn more about:
Why small businesses struggle with cash flow
How to diagnose where the problem lies
Step-by-step fixes that actually work
When to seek outside support
And if you're looking for a more in-depth guide, grab our free download, "5 Hidden Cash Flow Mistakes Costing Small Businesses Thousands (And How to Fix Them)."
Why Cash Flow Problems Are So Common (and Dangerous)
It’s entirely possible, and surprisingly common, for your business to be profitable on paper but still run into cash flow issues. That’s because revenue isn’t cash until it hits your account. And while your income may be growing, the timing of cash in vs. cash out can make or break your ability to operate smoothly.
Some of the most common causes of cash flow problems in small businesses include:
Delayed client payments or unpaid invoices
Spending ahead of income (especially with inventory or marketing)
Lack of cash flow forecasting
Overreliance on your bank balance to make decisions
No system in place to manage taxes, owner compensation, or reserves
And unlike other financial problems, cash flow shortages don’t usually happen all at once, they sneak up on you. One late invoice here, one unexpected expense there, and suddenly you're stuck, unable to cover payroll, pay bills, or invest in growth.
Step 1: Get Clear on What’s Really Going On
Before you can fix the problem, you need to diagnose it. Start by asking:
Am I invoicing clients on time?
How long does it take me to get paid after issuing an invoice?
What are my fixed monthly expenses?
Have I accounted for taxes, upcoming bills, or slow months?
Is there a difference between when I earn revenue vs. when I receive it?
If you’re relying on your bank balance to tell you whether you can afford something, you're only seeing a small part of the picture.
Step 2: Invoice Faster (and Follow Up Relentlessly)
One of the biggest (and easiest to fix) cash flow mistakes is delaying invoices. Many business owners are so focused on client delivery that they forget to bill promptly. Or they feel uncomfortable following up when clients pay late. But remember: you’re not in business to be a bank.
Quick fixes:
Set clear payment terms (Net 7 or Net 15 instead of Net 30)
Send invoices immediately upon project delivery or milestones
Use automated tools to send reminders for overdue invoices
Offer small discounts for early payments if it makes sense
Step 3: Forecast Your Cash Flow (Even If It’s Simple)
If you don’t have a cash flow forecast, you’re essentially flying blind. A basic 90-day cash flow forecast will show:
What you expect to earn each week/month
What you know you’ll need to pay out
Any projected gaps (so you can plan ahead, not panic later)
At KG Accounting, we help clients build these forecasts based on real data, not guesswork, so they can spot red flags before they turn into financial emergencies.
Step 4: Separate Business and Personal Finances
If you’re pulling from your business account for personal expenses or mixing income, it becomes nearly impossible to track what’s actually going on. Every business, no matter how small, should have:
A separate business bank account
A set monthly draw or owner compensation plan
A dedicated tax savings account
This alone can help you manage cash more clearly and stop unintentional overspending.
Step 5: Know Your Break-Even Point
Many small business owners don’t know the minimum revenue they need each month to cover their baseline expenses, aka their break-even point. Once you know this number, you can:
Set smarter pricing
Make better hiring or investment decisions
Focus on bringing in the right amount of business, not just “more”
If you’re not sure what your break-even point is, this is a perfect conversation to have during your Right-Fit Call (more on that below).
Step 6: Build a Cash Buffer
This can feel impossible if you’re already stretched thin, but having even one month’s worth of expenses in reserve gives you breathing room when:
Clients pay late
Sales dip seasonally
You have a surprise expense or opportunity
Start small, even setting aside 5–10% of revenue into a reserve account can make a meaningful difference over time.
Step 7: Bring in Strategic Financial Support
You don’t have to figure all of this out on your own. If you’re at the point where:
Your business is growing
You’re making money but never feel in control
You don’t have time to analyze your numbers
You want help deciding what to pay yourself, when to hire, or how to scale...
Then it’s time to bring in a financial partner, someone who can help you interpret your numbers, not just record them.
At KG Accounting & Consulting, we offer monthly financial packages for businesses at all stages, including Fractional CFO support for those ready to lead with data-backed strategy.
Need Help Fixing Your Cash Flow?
You don’t need to struggle with inconsistent cash flow, surprise shortfalls, or financial uncertainty. You just need the right systems and the right support.
Book your free Right-Fit Call to talk through your current situation and see if we’re a match to help you move forward with confidence.
And if you're not quite ready to talk, start by downloading our free guide, 5 Hidden Cash Flow Mistakes Costing Small Businesses Thousands (And How to Fix Them)
Let’s get your cash flowing in the right direction.
Comments