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Thought Leadership

Creating habits to improve your cash flow

The best way to improve anything – whether it is your well-being, productivity, or business – is developing good habits. And, the way to make these habits stick is by adding them to your routine.

In this article, I am going to tap into my experience at Cash Flow Frog to share with you the habits that make the difference in improving the cash flow performance of your business. I am confident that incorporating these habits into your weekly work schedule will have a profound impact on your business.

Here are five things that you must regularly make time for in your weekly schedule:


You work hard to provide goods and services to your customers. That is what you do, and you do it well. But, the job doesn’t end there. If you want to keep your business running, you need to make sure you don’t run out of cash. So, to avoid delays and avoid interrupting your workflow, create one or two time slots in your weekly schedule for invoicing. The faster you invoice, the sooner you can start collecting.


The time has come to get paid, and since you are probably more focused on the work in progress, you need to make sure that outstanding invoices are not forgotten.

So, what’s the right way to collect? As you may already know, the answer to that question depends on the customer. While you need to have your basic collection process, you also need to make adjustments based on your experience with each and every customer:

  • Update their payment terms.
  • Decide when to send reminders: a day before the invoice is due, or maybe three days after?
  • Are email reminders good enough? If not, perhaps you should give them a call.

If you can find the time, calculate the average number of days it takes to collect the payment from each customer, so that you can improve the process and plan your cash flow accordingly.

Track your cash flow performance

The first step towards improving your cash flow is gaining a better understanding of your collection and spending. Take 30 minutes to an hour every week to go over your cash flow during the last 30 days. That will help you get a clear picture of your cash flow performance.

Create a cash flow plan

Now that you have incorporated basic cash flow habits into your weekly schedule and you have a better understanding of your cash flow, it’s time to start planning ahead.

Cash flow planning can get pretty complicated, so you need to start with the basics:

  • Start by calculating your current cash balance.
  • Add your upcoming collections on their expected dates. Here is where the calculation of the average number of days to collect from a customer becomes useful.
  • Add your upcoming expenses on their expected dates.

Start off with a cash flow plan for the next 90 days. When you’re finished, go over your plan and try to make some improvements. For example, try to cut your spending when operating cash flow is negative, or allocate savings to invest in growth when it’s positive.

Planned vs. actual

Now that you’re tracking your cash flow and planning ahead, it’s time to start comparing your planned and actual cash flow.

Go over the differences between the planned and actual cash flow, and try to pinpoint what caused them:

  • Did certain collections take longer than you had expected?
  • Did you forget to include certain expenses in your plan?
  • Did your sales go up faster or slower than you had expected?

Tracking your performance in relation to your plan will help you make sure that you stick to your plan and improve your planning for the future.

Remember, cash flow is the oxygen of your business. Incorporate these simple habits into your schedule and you will get results.

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