CASH FLOW TIPS: Craig Alexander Rattray says you should ignore the myths around managing your cash

There are a number of common myths (and traps), and many more that are used as an excuse not to manage cash flow.

Myth: Our business is unique; we do not need to manage cash flow because…

We will concede the point that your business is unique.  However, if the business is to have any chance of success, you must manage cash flow.  The only business that can get away without cash flow management is the rare one that has a never-ending supply of cash.  To be clear, this type of business probably only became successful by focusing on cash management.  For example, Apple has large cash reserves, and we guarantee that they still have a large competent team managing their cash.  Be unique in who you are and what you do but embrace the power of cash flow management to succeed in business.

Myth: My business is too small to need cash flow management

This is wrong, plain and simple.  Business size does not determine whether your business needs cash flow management.  Instead, desire for success should determine whether your business needs cash flow management.  In fact, smaller businesses are often able to benefit significantly from cash flow management.  Developing good habits when the company is small can have a significant impact on the business.  Having a small business does not exempt you from planning or managing cash flow.

Myth: I am too busy to create a cash flow management system

We understand being busy.  Being an entrepreneur means that we wear many hats.  The key questions are:

  • Are you busy working in or on your business?
  • Are you working on mission critical tasks that only you can do or menial tasks that can and should be delegated?
  • If you do not plan for your business’ success, how will you know which tasks are mission critical?

Creating an overall plan, including cash flow management, will help you prioritise how you spend your days.  Clarity from planning should reduce “busy for the sake of being busy” tasks.

Remember, you do not need to create the system.  As stated in the Financial Management section earlier, bring in people to help you who understand accounts and finance either full-time, part-time or on an outsourced basis.  They can build your cash flow model, or you can make use of the free gifts that we provided at the start of this book.

Myth: I cannot afford a cash flow management system.  I am barely paying my bills now

You cannot afford not to.  Failing to plan is planning to fail.  A simple cash flow management system can be implemented easily and quickly.  At its simplest, identify the bare minimum monthly expenses that your business needs to cover to survive.  Once you know this, determine what sales you need to make to cover your fixed costs and any direct costs related to sales.  Create a sales plan to ensure you meet this minimum number every month.  Set aside surplus funds for a rainy day or start saving to make larger business purchases.

Myth: I have a system. I work as hard as I can to eventually pay my bills

We are sorry to tell you this, but this is not a system and is based purely on hope and blind optimism.  Hoping to pay bills “eventually” will keep you and your business trapped in survival mode.  Common symptoms of this “system” include working long hours, stress, and a sense of perpetual struggle.  Running out of money before you run out of month on a consistent basis is a sure sign that your current system is not working.

Myth: I love working in my business.  I do not want to waste my time working on it

We hear some variation of this from a lot of struggling entrepreneurs.  They love creating their product or delivering their service but do not like the stress of managing their business.  Very few people are taught how to run a business while learning the skills to do the actual work of the business.  If you do not want to manage your business, why are you in business?  Explore what motivates you.  If you truly just want to do the work, consider finding someone who can manage the business while you focus on doing the work.  Remember that the cash generation capabilities of the business impact on its value.  The more cash the business generates, the more it is worth.


These are the myths that come up most often in our discussions with entrepreneurs.  There are many more and far too many myths out there for us to debunk them all.  If you want to find an excuse not to manage cash flow, you will.

Our assumption is that by investing in this book and reading to this point that you are not looking for excuses. We have explained earlier how fear, lack of knowledge or misunderstanding can hold you back in business. We expect you to act and build a successful business that focuses on cash flow. You have the tools and information to do that now, and to master cash flow.

Cash Flow Tips appears here every Thursday

Extracted from Mastering Cash Flow For Business Owners by Craig Alexander Rattray and Jeff Borschowa, available on Amazon

Craig writes a column for Daily Business on alternate Mondays