If there’s one thing you’ll never run out of when you’re running an online business it’s financial challenges. Among the several many challenges out there cash flow is one most likely to give you a headache. Managing cash can mean the survival or growth of your online business. Cash flow problems contribute to 82% of small business failures, according to recent studies. Do we want to scare you with these statistics? Absolutely not. Effective cash flow management is attainable; it just requires some forethought.  There are many steps you can take. 

Implementing tools for automated payments, reducing invoice delays, and utilizing real-time payment options can significantly improve your liquidity. Staying on top of your cash flow game will require that you pay attention to the options out there and pick the best one for you. Once that’s done, you’ll need to stay informed too. 

Let’s now look into what you might find out there once you find yourself in a bit of a financial pickle when you run an online business.

Effective Ways To Help You Manage Your Cash Flow

In this section we’ll go into seven key methods to manage cash flow, starting with obtaining cash advances and expanding into other practical strategies for keeping your finances in check. You might find that all of these work for you, or none of these work for you. In case you don’t find the option for you – don’t be discouraged. You can do your own research until you’ve found what you need..

1 – Getting A Cash Advance Online

If you have short-term cash flow issues a cash advance might do the trick. Many fintech companies and lenders offer online cash advances specifically for small and online businesses. Platforms like PayPal, Square, or Credit Club provide fast access to working capital, often repaid via a percentage of your daily sales. 

This method helps you maintain cash flow during slow periods without having to take on a traditional loan. It is truly paramount that you carefully evaluate the repayment terms. The fees for cash advances can accumulate if you don’t manage them.

2 – Improve Receivables With Automation

If you want a straightforward way of managing your cash flow, look no further. With programs like QuickBooks, Xero, or FreshBooks  you can automate your invoicing process with a snap of your fingers. This basically streamlines your receivables by automatically generating and sending invoices.

Thes tools we mentioned also offer automated reminders for overdue payments, helping you stay on top of what is owed to your business. This tactic reduces the time spent on manual follow-ups and ensures consistent payment cycles​.

3 – Utilize Cash Flow Forecasting Tools

Since we’ve already mentioned time is of the essence, it makes sense you’ll want to know how your cash flow behaves. Cash flow forecasting provides insight into future financial bottlenecks (seasonal downturns, expected costs, projected delays and so on) and helps you prepare in advance. 

Consider software like Float or HighRadius since they provide real-time visibility into your cash position, offering both short-term and long-term forecasts. Forecasting allows you to make informed decisions on investments or cost reductions, as well as the day to day financial flows of your business. 

4 – Negotiate Payment Terms With Suppliers

Here’s where your people skills come into play – you can negotiate better payment terms with your suppliers. If you have built a good relationship with your vendors, ask for extended payment terms. This may sound a bit wonky but it isn’t – it’s a legitimate strategy. 

Let’s picture this situation – you’ve negotiated shifting from 30-day payment to 60-day payment. This allows you to hold on to cash longer, which improves your liquidity. From your end, you can then offer your customers early payment incentives so they feel motivated to  settle invoices faster, which gives you quicker cash inflows, which also helps your liquidity.

5 – Implement An Emergency Fund

This advice might be considered common sense but it’s worth its weight in gold. Building an emergency cash reserve that  allows you to cover operational costs without scrambling for external financing. 

The short of this is – if you save for an emergency fund you won’t have to take out a loan. Or maybe you’ll need to take out a smaller loan. When it comes to actual amounts of money, aim for at least three to six months of expenses. This fund can help you stay operational during downturns, unexpected slow periods, or economic crises. Having this financial cushion prevents the need to take on high-interest loans when cash flow dries up.

6 – Offer Subscription Services

You might have noticed that literally every service would like to be a subscription and cash flow is the reason why. Subscription payments provide a steady and predictable income of revenue. Financially, everyone is in love with subscription services from Netflix to dietary services.  

If you can apply it to your business model do not hesitate to do it. If your online business sells products or offers digital services do not give it another moment’s thought – definitely go for a subscription model. 

Subscriptions help smooth out cash inflows, making it easier to predict monthly revenue and plan for expenses. It’s such a popular choice that many e-commerce platforms now integrate with tools that support subscription management, ensuring that you receive regular payments with minimal administrative effort​.

7 – Use Short-Term Investments To Grow Cash Reserves

Hopefully, you’ve mastered the art of the cash flow and you now have some idle cash – kudos to you. What now? Short-term investment might be a better option instead of letting cash sit in low-interest accounts. Think about money market funds or high-yield savings accounts, these can help your money start making more money.  

These vehicles allow your cash to grow while remaining accessible for business needs. When properly managed, short-term investments not only preserve your liquidity but also generate returns, providing an extra layer of financial security​. 

Wrapping Up 

As we’ve said before, some of these tips might be just what you need or only some of them might work for you. 

We hope this isn’t the case, but none of these might work for you. We don’t believe that might be the case, but it’s not impossible. The key takeaway here is that you can be aware of what might work for your cash flow and find the solution that works for you. Once again, maintaining a healthy cash flow isn’t all that difficult but it is important.