Cashflow: The lifeblood of my business

When I first started my business, I thought turning a profit would mean I was in the clear but — as I explain in my book Business Mechanics — cashflow is the true lifeblood of a business because without it, even the most profitable operation can grind to a halt.

Think of the fuel gauge in a car; if the tank runs dry, you’re not going anywhere, no matter how good the engine is.

Learning the hard way

I remember vividly the first time I felt the pinch of a cashflow gap. I had a couple of clients who took months to pay their invoices, while my suppliers expected their money in 30 days. You have no doubt experienced that awful pressure. ?I didn’t like the feeling and realised I needed to fix the flow of cash or risk stalling completely.

Spotting the issues

I started by identifying some key problems. My invoicing was often delayed because I didn’t have a solid system in place, and while I was paying suppliers quickly—sometimes too quickly—my customers were dragging their feet. To make matters worse, I was holding too much stock, tying up cash that could’ve been used elsewhere. It all added up to a cashflow crunch that I couldn’t ignore.

Making changes

The solutions I implemented were practical but transformative:

• Streamlining invoicing: I started sending invoices immediately after completing jobs and invested in a mobile payment system for on-the-spot transactions. That alone sped up the flow of incoming cash.
• Negotiating terms: I had conversations with suppliers to extend payment terms, aligning them better with when my customers paid me.
• Monitoring stock: I took a hard look at inventory and reduced unnecessary stockpiling, freeing up cash that had been sitting on shelves.
• Training the team: I brought everyone on board, teaching them how to stick to these new systems and ensuring consistency across the business.

The difference it made

One example that always stands out to me is an electrical contracting business I worked with. When I first met them, they were in a tough spot—cashflow was unpredictable, and they were constantly juggling late payments and supplier obligations. It became clear that their invoicing processes were part of the issue—jobs were completed, but invoices weren’t sent promptly, and chasing payments took far too long.

We addressed this by implementing on-the-job invoicing and investing in a mobile payment system. The team was trained to issue invoices immediately after a job was finished, and customers could pay on the spot using electronic payment options. The transformation was remarkable. Late payments dropped almost overnight, and cashflow became more predictable and manageable.

The business owner told me that for the first time in months, they could rest easy knowing payroll and expenses were covered without scrambling for funds. It’s a simple example of how improving systems can have an immediate, tangible impact on a business’s financial health.

Staying vigilant

I always recommend implementing what I call a quarterly “Warrant of Fitness” for your business. It’s a simple yet powerful habit: every three months, take the time to review key areas like debt levels, stock management, overheads, and payment processes. This routine not only keeps you in control but ensures you catch potential issues early—before they spiral into bigger problems.

Looking ahead

Managing cashflow isn’t just about increasing revenue; it’s about making every dollar work smarter, not harder. When you have the right systems in place, you’re no longer stuck reacting to crises. Instead, you’re free to plan and grow with confidence. Cashflow shifts from being a source of stress to becoming the fuel that drives your success. And that’s the kind of change every business owner deserves.