Managing cash flow can feel like walking a tightrope, but once you know the mistakes to sidestep, you'll be in a much better place to keep that cash flowing. Here are some of the top cash flow mistakes many small businesses make and how to avoid them.

1. Ignoring overdue payments

The mistake: Letting invoices pile up without follow-up. Out of sight, out of mind? Not here!

How to avoid it: Set up regular follow-ups, send friendly reminders, or even offer discounts for early payment. Every overdue invoice is cash that could be in your pocket.

2. Over-investing in inventory

The mistake: Stocking up on inventory that just sits there.

How to avoid it: Keep only what you need. Focus on moving slow-sellers, and avoid tying up cash in items that gather dust instead of profits.

3. Overlooking small expenses 

The mistake: Thinking those 'little' expenses don’t add up. Spoiler alert: They do!

How to avoid it: Track even the small stuff. It’s surprising how much a few “tiny” costs can drain your cash flow. Regularly review and see where you can trim.

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4. Not having an emergency cash cushion

The mistake: Running your business without a cash buffer and hoping for the best.

How to avoid it: Aim to set aside a little each month for a rainy day. Even a small cushion can help you handle unexpected costs without stress.

5. Taking on too much debt

The mistake: Relying on loans or credit to fund daily operations.

How to avoid it: Use debt strategically. If you’re borrowing to make ends meet each month, it’s time to look at your cash flow fundamentals and adjust.

6. Ignoring seasonal trends

The mistake: Treating every month like it’s business as usual, even when sales dip.

How to avoid it: Know your seasonal peaks and valleys, and adjust your spending and saving to match. Prepare during high seasons to stay afloat during the lows.

7. Letting overheads get out of hand

The mistake: Not reviewing ongoing expenses for things like rent, utilities, or software.

How to avoid it: Check your recurring costs at least quarterly. See if there are any that can be renegotiated or trimmed, and only pay for what truly adds value.

>> Read more: How much money should you set aside for tax?

8. Focusing too much on sales, not enough on profits

The mistake: Thinking more sales will solve everything. Spoiler: Profit matters!

How to avoid it: Look at your profit margins. Sometimes the best move is focusing on higher-margin products or services rather than increasing volume alone.

9. Putting off invoicing

The mistake: Delaying invoices or not invoicing promptly.

How to avoid it: Set up a system to invoice immediately after work is done or goods are delivered. The sooner you invoice, the sooner cash flows in.

10. Not reviewing cash flow regularly

The mistake: Assuming cash flow takes care of itself.

How to avoid it: Block out time each month to review your cash flow. Check your ins-and-outs, spot trends, and adjust as needed. Staying on top of it means fewer surprises down the line.

By keeping these mistakes in mind, you’ll be way ahead of the curve in managing your cash flow like a pro. Every step you take to avoid these pitfalls is a step closer to a healthier, more resilient business. Happy cash flowing!

Please note, this is general advice and not a substitute for professional financial or legal counsel. Always consult with a mortgage advisor or financial expert for advice tailored to your situation.