Financial Wellbeing 101

Don’t Splash Your Cash

By Montaque Swanepoel

It is a well-known fact that cash flow is an important aspect of any business, but how do you manage it as a small business owner in South Africa? Whether you have just started your business or are looking to grow and expand, one thing remains the same: you need to know what your current situation looks like.

Let's be honest, running your business is hard enough. With the added stress of battling to get client payments, working around load shedding and navigating a struggling economy in the grip of a pandemic, you certainly don’t need one more thing to worry about.

Here are some of the things that you can do to manage cash flow as a small business owner in South Africa:

Create a budget to track business expenses 

By creating a budget, you are setting up targets for your business to achieve. This also allows you to monitor expenses and see where your money is being spent.

Your expenses can easily spiral out of control if not managed closely. Review your budget regularly, and make cuts where necessary.

Set money aside for taxes and other expenses in advance

Setting money aside for your taxes in advance of the payment date will ensure you are prepared when the bill arrives. Having a large income tax or VAT bill can be costly if you can't pay in time.

If your taxes are not paid in time, they can quickly snowball into a large sum of money owed through penalties and interest incurred. It's better to set cash aside before this happens.

In some scenarios, it's even best practice to place this money in a separate short-term investment account to avoid spending your tax money before it's due, as well as earn some interest while it's there. 

Track all bills payable (creditors) and income receivable (debtors)

Keep track of your creditors and debtors. This will ensure you do not miss any payments or receipts. Having accurate accounting records as transactions take place can help prevent delayed payments from clients and missing due dates from suppliers. This is most easily done with a cloud-based accounting system such as Xero, Quickbooks or Sage One.

While keeping accurate records is important, it is also crucial to send and follow up on unpaid statements and invoices.

Tools like automated reminders will save you time and money, and help you keep good relationships with clients.

Pay off high-interest debt first before investing in assets with lower returns

Short-term liabilities generally attract higher interest rates than assets.

If you have debts with high interest rates, this is the first place to start paying off expensive debt. Doing so will reduce your debt load and interest expenses.

Invoice your customers fast and efficiently

Keep your business running smoothly by sending invoices to customers timeously. This will help ensure that payments come in on time, and that there are no delays or missed deadlines. Invoice as soon as possible, and in some cases even upfront.

You should also make sure you follow up with your clients if the payment does not arrive as expected.

Make payment easy for your clients

Offer multiple payment methods, and make it easy for clients to pay you. In general, the more options you give them, the easier it will be to pay you. Doing so will improve customer service by making the process more seamless for them. You should also consider asking customers about their preferred payment method before sending out an invoice. This will increase the likelihood of receiving your payment on time.

Delay payment to suppliers

As a general rule, you want your clients to pay you as soon as possible, and to pay your suppliers as late as possible.  

Although this might not always be possible, it is extremely beneficial to negotiate either settlement discounts for early payment or delay payments to suppliers as far as possible while still maintaining good relationships and remaining within the terms agreed with your suppliers.

Incentivise early payment on invoices

Incentivise your clients for early payment to encourage them to pay you earlier rather than later. Remember, they follow the same rule of thumb to streamline their cash flow to pay you as late as possible.

Although this is a good tactic to receive earlier payment, only use this as a last resort to avoid giving away hard-earned revenue.

Managing cash flow isn't easy, but it is certainly possible. These ideas will give you a good place to start on your journey to financial success!

About the Author

Montaque Swanepoel is a chartered accountant and founder of CFO360. CFO360 has helped hundreds of business owners to streamline their processes and understand their finances so that they can spend less time on admin, and more time on the things that matter. Find out more at or get in touch at [email protected]

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