When you start a business, most of the focus is on getting clients, designing your offer, and making those first sales. But there’s a quieter, less glamorous piece that can make or break a new business:

Cashflow.

You can have great ideas, loyal customers, and even a profit on paper and still feel constantly stressed because the cash isn’t there when you need it.

In this post, we’ll break cashflow down into plain English and walk through practical steps you can take to manage it, even if you’re not “a numbers person.”

What actually is cashflow?

Cashflow is simply the movement of money into and out of your business.

• Money in = sales, client payments, refunds from suppliers, grants, etc.
• Money out = rent, stock, software, invoices you pay, tax, your own drawings or salary.

You could be profitable over the year (earn more than you spend overall), but if most of your cash comes in after your bills are due, you’ll feel constantly skint and stressed.

Good cashflow management is about timing:

“Will I have enough money in the bank on the days important payments are due?”

5 Practical Ways to Manage Cashflow in a New Business

1. Create a simple cashflow forecast (step-by-step)

A cashflow forecast sounds fancy, but it can be as simple as one spreadsheet that answers:

“Roughly how much money will I have in the bank at the end of each month?”

Here’s a basic way to set it up:

Step 1 – Open a spreadsheet

Create columns for the next 6–12 months: Jan, Feb, Mar, etc.

Step 2 – Add your opening bank balance

In the first column, write down how much money is currently in your business bank account.
Example: Opening balance in April: £1,000

Step 3 – List your expected “money in” for each month

Think realistically about what’s likely, not what you hope for.

Examples:

• Retainer client: £400/month
• Website project due in May: £600
• Product sales (average): £300/month

In your spreadsheet, add a row called “Cash In” and put these amounts in the months they’ll actually be paid.

Step 4 – List your fixed monthly costs (“money out”)

These are expenses that repeat each month:

• Co-working or office rent: £250
• Software subscriptions: £60
• Phone & internet: £40
• Insurance: £25

Add them under a “Regular Cash Out” section.

Step 5 – Add occasional or one-off expenses

Now think about costs that don’t happen every month:

• Laptop purchase in June: £700
• Branding/photoshoot in July: £300
• Annual insurance in October: £180

Add another section for “One-off Cash Out” and put these in the relevant months.

Step 6 – Do the simple maths

For each month:

Opening balance + money in – money out = closing balance

The closing balance of April becomes the opening balance for May, and so on.

Even this simple version will show you:

• Months where your balance looks tight or negative
• Months where you have more room to invest
• Whether your current prices and costs are sustainable

You can review and tweak this forecast once a week as real numbers come in.

2. Invoice quickly, clearly and follow up

Your forecast will only work if money actually arrives when you expect it to.

Good habits to build:

• Send invoices as soon as work is delivered or even upfront/deposit for projects.
• Make sure your invoice clearly shows:
  • “Payment due within X days” (not “on receipt” – people ignore that)
  • Your bank details or payment link
  • What the invoice is for, in simple terms
• Add a polite reminder process:
  • 3 days before due date: “Just a reminder your invoice is due on…”
  • 1 day after due date: “Looks like this one might have been missed…”
  • 7 days after due date: firmer but still polite.

Most accounting tools can automate these reminders for you but even copy-and-paste emails from a template are better than nothing.

3. Set payment terms that protect your cashflow

When you’re new, it’s tempting to say “yes” to whatever terms the client wants. But long payment terms (30–60 days) mean you are funding their business.

For many start-ups, a good starting point is:

• 7–14 days payment terms for service work
• 50% upfront, 50% on completion for projects
• Payment upfront for small, one-off jobs or digital products

You’re allowed to protect your business. Anyone who refuses reasonable terms may not be the right client for you.

If you already have clients on long terms, you can gradually tighten them:

“As a small business, I’m updating my payment terms to 14 days so I can continue to offer the same level of service. These will apply to invoices from 1st May onwards.”

4. Build a “cash cushion” (even if it’s tiny at first)

Cashflow feels very different when you know you could cover a quiet month.

Aim for a cushion of one month of basic business expenses to start with. That might sound big, but you don’t need it all at once.

Practical way to build it:

• Choose a percentage to save from every payment (even 5–10%).
• Move it into a separate “buffer” or savings pot.
• Treat it as untouchable except for real emergencies (not just “nice to have” purchases!).

Over time, try to grow this to 2–3 months of expenses. It gives you breathing space when a client pays late or a project falls through.

5. Park your tax and VAT money somewhere else

One of the biggest shocks for new business owners is the first tax bill. It’s very easy to spend what’s in the bank and forget that a chunk of it doesn’t actually belong to you.

Here’s a simple system:

1. When a client pays you, estimate the tax on it.
   • As a rough guide, putting aside 20–30% of your profit (or income, if you’re unsure) is a sensible start.
2. Move that amount into a separate “Tax” account or pot straight away.
3. If you are VAT registered, do the same for the VAT element.

This means your day-to-day cashflow forecast is based on what you can really spend, not on money that’s already promised to HMRC.

Example: A Simple Weekly Cashflow Routine

Here’s how a new business owner might manage cashflow in just 30–40 minutes a week:

Every Monday (“Money Monday”)

1. Check your bank balance
   • Note today’s balance in your spreadsheet.
2. Update “Money In”
   • Add any invoices that were paid last week.
   • Move 20–30% of that income into your Tax pot.
   • Move your chosen % into your Cash Buffer pot.
3. Update “Money Out”
   • Add any new expenses (suppliers, software, travel, etc.).
   • Check any upcoming big payments due this week or next.
4. Scan your forecast
   • Look at the next 4–6 weeks in your spreadsheet.
   • Are there any dates where the balance looks too low?
   • If yes, what small actions could you take?
     • Chase overdue invoices
     • Bring a project payment forward
     • Delay a non-essential purchase
5. Send/chase invoices
   • Send invoices for work completed.
   • Send gentle reminders for anything overdue.

This tiny routine keeps you in the driving seat, rather than being surprised by your bank balance at the end of the month.

Final Thoughts

Cashflow problems don’t mean you’re “bad with money” they mean you’re learning to manage a whole new rhythm in your business.

By:

• Forecasting what’s coming in and going out
• Invoicing quickly and clearly
• Setting fair payment terms
• Building a small cash cushion
• And separating out your tax money

…you give yourself breathing space, confidence, and a much calmer relationship with your business finances.

Quick Summary

Cashflow is all about timing. Making sure there’s enough money in the bank on the days bills are due.
A simple spreadsheet, regular invoicing, clearer payment terms, a growing cash cushion, and a separate tax pot can transform your cashflow from constant worry into something calm and manageable.