Cash flow isn’t just about having money in the bank, it’s about making sure your business has enough cash to operate, grow, and withstand unexpected challenges. Many profitable businesses fail because of cashflow mismanagement.
Here are the most common cashflow mistakes I see as a Virtual CFO, and how you can avoid them.
1. Confusing profit with cashflow
Mistake: Thinking that because your business is making sales, it’s financially stable.
Fix: Remember that profit doesn’t mean cash-in-hand. Track when cash is actually received vs. when expenses are due.
2. No cashflow forecasting
Mistake: Operating month to month without a clear picture of future cash flow.
Fix: A simple cash flow forecast can help you predict when money is coming in and going out, preventing surprises.
3. Letting late payments go unchecked
Mistake: Not following up on overdue invoices quickly enough.
Fix: Set clear payment terms, use automated reminders, and consider incentives for early payments.
4. Not planning for tax liabilities
Mistake: Forgetting that VAT, corporation tax, and self-assessment bills need to be set aside.
Fix: Treat taxes like a monthly bill; set aside money each month so you’re never caught off guard.
5. Growing too fast without a financial plan
Mistake: Scaling up before ensuring the business can handle increased costs.
Fix: Before hiring staff or investing in expansion, run financial projections to ensure sustainability.
Conclusion: Cashflow confidence starts with the right guidance
Even small changes to how you manage cash flow can make a massive difference in your business’s stability and growth. But if you’re struggling to get a clear picture of your cash position, help is just a short call away.
Need help managing your cash flow? Let’s chat. Book a free CFO call today.
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