1. Understand the difference between profit and cash
Profit is what's left after subtracting costs. Cash is what you have available today. If you sold on credit or all your money sits in inventory, you can be profitable and still have nothing to pay with.
2. Record everything that comes in and goes out
For one month, log every movement with its date. You don't need a complex system: a spreadsheet is enough.
- Money in: collected sales, deposits, and credit customers' payments
- Fixed costs: rent, internet, wages, and utilities
- Variable costs: merchandise, packaging, and shipping
- Your own pay as the business owner
3. Forecast the next four weeks
Write week by week how much you expect to collect and how much you must pay. If any week ends negative, you'll know in time to collect earlier, move a payment, or pause a purchase.
4. Speed up money coming in
Charge deposits on made-to-order items, reduce credit sales, and follow up with people who owe you. A catalog with clear prices helps too: with Vallen, customers send the order with the total already calculated, so you can charge without back-and-forth.
5. Organize money going out
Negotiate terms with suppliers, avoid overbuying inventory, and group your purchases. Every product that sits on a shelf for months is money you can't use.
6. Build a cushion
Set aside a small percentage of every sale until you have at least one month of fixed costs. That fund lets you survive a bad week without going into debt.
Cash flow isn't advanced accounting: it's knowing how much money you'll have and when. Record your movements, forecast a month ahead, and watch both how fast you collect and how fast you spend.