How to manage your small business finances

Know your cash position

Check your reconciled bank balance, then consider payments already committed. An unpaid customer invoice is not yet cash you can spend. Profit and cash flow tell different stories: a profitable sale can still leave a cash gap while you wait for payment.

Look ahead before spending

Build a simple weekly cash forecast for the coming month. List expected customer receipts alongside payroll, rent, supplier payments, loan payments and known tax obligations. Use realistic payment dates. Ask what would change if an important customer paid later than expected.

Compare your budget with reality

Review actual revenue and expenses against your budget each month. Separate regular operating costs from unusual purchases, and investigate meaningful differences. The aim is to understand the reason for a change before adjusting spending or updating your forecast.

Keep unpaid invoices visible

Use an accounts receivable aging report to see which invoices are approaching their due dates and which are overdue. Follow up consistently and resolve invoice questions promptly. Review upcoming supplier bills at the same time so you can plan outgoing payments.

Make your reports useful

An income statement helps explain revenue, expenses and profit over a period. A balance sheet shows assets, liabilities and equity at a point in time. Review them alongside your cash forecast, and choose one action: investigate a rising cost, follow up an overdue balance or revisit a planned purchase.