Managing money coming in and money going out is a challenge for many businesses. But here’s the thing: effective cash flow management isn’t just about survival. It’s the fuel for your business growth.
You’re likely facing unique challenges. eCommerce businesses have to deal with inventory and seasonal spikes. Marketing agencies often deal with project-based revenue and client payment delays. And SaaS companies? Well, you’ve got subscriptions and customer churn to worry about.
The good news is, this blog post will provide actionable strategies tailored to your specific sector. We’ll look at how to take control of your cash flow, no matter what business you’re in.
The Basics Of Cash Flow
In simple terms, it’s the movement of money into and out of your company. Inflows are the money coming in (sales, investments, etc.), and outflows are the money going out (expenses, salaries, etc.). Managing your cash flow effectively will keep you stable.
How The Cash Flow Cycle Works
The cash flow cycle represents the timeline of cash flowing through your business.
- Investment: You invest in resources (inventory, marketing, staff).
- Production/Service: You use these resources to create products or provide services.
- Sales: You sell your products or services.
- Collection: You collect payments from customers.
This cycle repeats. Efficient management makes sure it continues smoothly, but you have to ensure you have enough revenue. Disruption to this cycle can cause serious problems.
Common Cash Flow Challenges
Many businesses struggle with cash flow. Here are a few of the common issues:
- Late Payments: Delayed payments from clients or customers.
- Unexpected Expenses: Surprise costs like equipment repairs or emergency marketing spends.
- Seasonal Fluctuations: Variations in sales based on the time of year.
- Poor Budgeting: Inaccurate forecasting of income and expenses.
Cash Flow Statements
Cash flow statements are a report that summarises the flow of cash. They show how your company generates and uses cash through operations, investments, and financing.
Understanding and regularly reviewing your cash flow statements is essential for informed decision-making.
Strategies To Improve Your Cash Flow
Managing Aged Receivables (DSO) & Payables (DPO)
Aged receivables — or Days Sales Outstanding (DSO) — measures the average number of days it takes for your clients to pay their invoices.
How to Calculate DSO:
DSO = (Accounts Receivable ÷ Total Credit Sales) × Number of Days
For example, if you’re owed €60,000 and your monthly credit sales are €90,000: (€60,000 ÷ €90,000) × 30 = 20 days It’s a critical cash flow lever, especially for marketing agencies working on project or campaign-based revenue.
Why It Matters:
- High DSO means cash is locked up in unpaid invoices, even if you’re profitable on paper.
- It affects your ability to pay staff, invest in growth, or cover tax bills.
- Agencies with DSO over 45 days often suffer from cash flow gaps, even when revenue is strong.
How to Manage It:
- Set Clear Payment Terms: Include due dates, penalties, and late fees in every contract.
- Bill Immediately: Don’t wait until month-end to invoice. Send invoices as soon as milestones are hit.
- Automate Follow-ups: Use Xero or Chaser to send polite, persistent reminders.
- Shorten Terms for New Clients: Start with 7-14 day terms before offering 30+ days.
- Monitor Client Payment Behaviour: Identify habitual late payers and adjust terms or require deposits.
- Use tools like GoCardless with Xero: This integration automates direct debit payment collection on the invoice due date, reducing admin and ensuring you’re paid faster without chasing.
💡 Benchmark: Top-performing agencies aim to keep DSO under 35 days. If you’re routinely waiting 45+ days, it’s time to tighten your credit control game.
Managing Aged Payables (DPO)
While DSO tracks how long it takes clients to pay you, Days Payable Outstanding (DPO) measures how long it takes you to pay your suppliers and vendors.
How to Calculate DPO:
DPO = (Accounts Payable ÷ Cost of Goods Sold) × Number of Days
For example, if you owe suppliers €40,000 and your monthly cost of goods sold is €80,000: (€40,000 ÷ €80,000) × 30 = 15 days
Why It Matters:
- A low DPO means you’re paying suppliers too quickly and potentially hurting your cash position.
- A high DPO might improve your short-term cash flow but could strain supplier relationships.
- Monitoring DPO alongside DSO helps you understand your working capital balance.
⚠️ If your DPO is consistently higher than your DSO — in other words, you’re paying suppliers faster than you’re collecting from clients — even a profitable business can face serious cash flow pressure. This mismatch is a red flag and needs attention.
Let’s break down specific cash flow strategies. These strategies are designed for marketing agencies, eCommerce brands, and tech companies in Ireland.. These strategies are designed for marketing agencies, eCommerce brands, and tech companies in Ireland.
Marketing Agencies
Forecasting and Planning
- Accurately predict future cash inflows and outflows to anticipate shortages or surpluses.
- Use forecasting to manage fluctuating client budgets and project-based revenue.
- Tools: Xero, Float, or QuickBooks for forecasting and budgeting.
Client Management
- Stabilise income with better payment terms and client billing discipline.
- Negotiate upfront, offer early payment discounts, and invoice immediately.
Cost Optimisation
- Balance full-time and freelance staffing to stay flexible.
- Review vendor contracts and overhead regularly.
Common Mistakes
Identifying Common Pitfalls
- Poor Invoicing Practices: Leads to delayed payments and cash gaps.
- Lack of Budgeting: You can’t manage what you don’t measure.
- Ignoring Projections: Leads to nasty surprises and knee-jerk decisions.
Advice on Avoiding These Mistakes
- Standardise and automate invoicing where possible.
- Budget quarterly, review monthly.
- Use rolling cash flow forecasts to avoid blind spots.
What’s Next In Cash Flow Management?
Emerging Trends
- AI-Driven Forecasting: Better data, sharper predictions.
- Blockchain Payments: Faster settlements, stronger traceability.
- Real-Time Reporting: Dynamic dashboards for decision-making.
Preparing for Change
- Stay agile. Adopt tech that matches your business model.
- Keep your financial team or advisor close to market and regulatory shifts.
Next Steps
Effective cash flow management is critical for the sustainability and growth of any business. By implementing the right strategies and using the right tools, you can take control of your finances and set your business up for success.
Around Finance provides advisory services tailored to eCommerce brands, marketing agencies, and SaaS companies in Ireland.
📣 Want to turn cash flow headaches into a strategic advantage? We can help. Book a consultation and let’s create a clearer financial path forward.
FAQs
What is cash flow management and why is it important?
Tracking money in and out ensures your business can pay bills and fund growth.
What are some common cash flow challenges?
Late payments, unexpected costs, seasonality, and poor budgeting.
How can marketing agencies improve cash flow?
Through accurate forecasting, retainer billing, and expense control.
What software helps manage cash flow?
Xero, Float, QuickBooks, and Syft are popular tools.
How does inventory affect eCommerce cash flow?
Too much ties up capital. Too little risks lost sales. Forecast well.
What can SaaS companies do to manage growth cash flow?
Plan your funding, reduce churn, and align costs with lifetime value.
What is invoice factoring?
Selling invoices at a discount to access immediate cash.
What does DSO mean?
Days Sales Outstanding — the average days it takes to get paid.
How do I build a business emergency fund?
Set aside a portion of peak-season revenue to cover slow periods.
Why diversify client base?
Losing a key client shouldn’t crash your business. Spread the risk.
