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5 Ways to Manage Your SME’s Cash Flow in 2022

By May 26, 2022Articles

South Africa is a land of SMEs. We certainly have large corporate companies, and plenty of them, but the life’s blood of the country is small, medium and micro-enterprises. However, while those big corporates have squadrons of finance people to manage their income, expenditure and cash flow, SMEs might struggle to do this effectively.

The major challenge for SMEs is resourcing – it doesn’t always make sense for a small business to employ a full-time accountant who can manage and monitor everything. Instead, the responsibility lies with the business owner and their team to manage their day-to-day finances, while an accountant might be outsourced.

Here are five ways your SME can manage cash flow more effectively.

1 – Cash flow forecasting

Whether you are able to employ an accountant or use one on a consulting basis, it’s a good idea to meet with them regularly – for example monthly – to do a cash flow forecast. This takes into account your expected income and expenditure, trends based on time of year, and various other factors of your finances, and helps you understand how your money is moving. You will then be better positioned to manage it effectively by making good choices about expenditures, and improving your revenue generation. 

In brief: A clear understanding of your cash flow, both current and forecast, helps you make informed budgeting decisions about your business. 

2 – Manage your credit

Many SMEs will choose to do business on an immediate payment basis, as this helps reduce the risk of unpaid credit, which leads to cash flow problems. However, some opt to offer a credit line of some kind. For example, you might charge a monthly contract or retainer fee, or offer payment terms for goods or services. In this case, it is critically important that you have a robust credit management system in place. 

Hot tip: Most of South Africa’s major banks, and many of the smaller ones, will offer SMEs cash flow assistance, with credit available to the value of incoming invoices.

3 – Manage your debt

It can be almost impossible to run an SME without some kind of monthly payment commitment. From internet connections, to rent, to regular suppliers, everyone has fixed amounts of money that have to be paid each month. You can reduce these kinds of commitments, however, by avoiding debt wherever possible, or managing it with care when it’s unavoidable. If you need to take a loan, whether it’s to purchase equipment, expand your business, or get your business off the ground, make sure it is a commitment that you can keep, and that won’t interfere with your other payment commitments.

Be wise: If applying for finance is unavoidable, investigate all the options available. Besides the major banks, there are many accredited and reputable business development finance institutions that may offer you better terms. 

4 – Automate your invoicing and payment collection

Rather than wasting time – and risking errors – on doing invoicing manually, automate your invoicing. This allows you to invoice immediately when a job is complete, or to set up monthly invoices that will run automatically until you stop them. By coupling this with automated payment collection, you will reduce both the time to payment, as well as the risk of non-payment.

Be smart: Outsource your invoicing and debit order collection to a company like Three Peaks. This takes all the hassle out of the process and helps you maintain a robust cash flow.

5 – Save

Savings can be vital to a healthy SME. They serve as a backup for quiet periods, or can be used for expanding your business. It’s best to consult with your accountant about the options available to you and decide what percentage of sales, revenue or profit you want to allocate to savings. 

Save smart: Savings can take the form of a simple business saving account, or any of a wide range of investment opportunities. Investigate the options available.


Three Peaks is ready to answer any of your cash flow, invoicing and debit order automation questions. Contact us today.