How to manage cash flow to keep your business predictable (and profitable)

This article was paid for by Intuit QuickBooks.

Operating a successful business often comes down to how well you track and manage cash flow, or the money coming in and out of your business. Jen Millard knows this all too well. The CEO of the Westbrook, Maine, canned water company mainelove, Millard has built a predictable 10- to 12-week cash cycle to run her business.

“It starts with an understanding of what it takes to actually make your product,” Millard said. “And then how are you using your cash flow to make that product?”

“I have to outlay a significant amount of money for aluminum 12 weeks before we go into production,” she added, creating a significant cash flow benchmark.

While often thrown around interchangeably, these three terms are quite different.

• Revenue: The total amount of money a business generates from selling its goods or services, before any expenses are subtracted. 
• Profit: Revenue minus expenses. 
• Cash flow: The movement of funds in and out of a business. Cash flow is a harbinger of financial health, liquidity and a company’s ability to meet its financial obligations. A cash flow statement breaks down activity into operating, investing and financing transactions. A positive cash flow indicates that liquid assets are increasing.

There’s a focus on profitability in business that can be misplaced: If you made $100,000 in January, but your employees, vendors and landlord haven’t been paid yet, you won’t know whether you’re on top or deep in the red. 

Here are some guidelines to help you maintain a predictable cash flow. 

1. Learn your business’s cash rhythm

Map expenses on a calendar, not just a spreadsheet. When do large bills hit? When do customers typically pay? Are you fronting costs weeks before payments arrive?

Many small businesses operate on seasonal or delayed cycles, so identifying the patterns in your company early will allow you to build bulwarks against gaps in funding instead of being blindsided by them.

QuickBooks Online provides detailed financial reporting that illustrates your cash rhythm so you know when revenue is highest, when large expenses are due, and how to reconcile the two. 

Being diligent about invoicing is obviously another essential part of managing cash flow and QuickBooks can help you limit discrepancies and lost or delinquent payments.

2. Harness the power of forecasting

Forecasting enables business owners to review past and current reports to make reliable predictions about sales, fixed and variable expenses, revenue, demand and cash flow. 

At a minimum, small business owners should forecast their income and expenses each month and review their cash flow weekly. Rent and payroll are typically fixed costs, but inventory, shipping and contractor hours can fluctuate. Noticing those shifts in advance allows you to adjust spending before a shortfall hits.

“All our inventory management, our debt management, and our daily and weekly cash flow are coordinated through QuickBooks,” Millard said, which helps her project and visualize income and expenses.

Leveraging QuickBooks’ toolset allows you to map out and digest your forecast, Millard said, whether you're a veteran with 20 years of experience or a first-time entrepreneur.

Nothing in business is entirely predictable, but forecasting can help you develop strategies for worst-case scenarios — like if a vendor suddenly closes up shop or your biggest client cancels their orders. Otherwise, how will you know if your current reserves can sustain operations, and what can be paused or renegotiated?

3. Weigh how opportunities will impact cash flow

New opportunities are really calculated risks, Millard said, whether it’s a change in supplier, an additional client or a new hire. Any variable will impact the amount and timing of cash coming into your business. 

Millard hasn’t collected a salary since she started her business in 2024. She was supposed to start paying herself in January, but then the number-one salesperson at a competitor approached her for a job.

“I chose to hire him and not pay myself,” she said. “He’s already brought in $600,000 worth of revenue in four weeks. I’ll take cash risks for talent, not for production. People first.”

Smaller operations have less of a financial cushion, making cash flow predictability a bigger priority. It means paying employees on time, maintaining good relationships with vendors and avoiding late fees and penalties with lenders.

It also reduces reactive decisions, like hiring freezes or turning to high-interest credit. 

Revenue may signal growth and profit may signal success, but cash flow determines survival. For small businesses, predictability goes beyond stability — it enables you to expand. A business that understands its cash cycle is a business that can scale. 

To learn more about QuickBooks, click here.

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