How to create good cashflow habits

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One of the biggest pain points for small business owners (particularly in the first few years) is cashflow. The concept seems pretty simple, all you need is more money flowing into your business than flowing out of it. But unfortunately, such a simple concept isn’t so easy to achieve.

And, while it’s one of the biggest pain points, cashflow management is also one of the most essential cornerstones of running a business and if you get that right, it could be the difference between surviving or thriving.

Staying on top of the numbers can be tricky, especially if you have no experience. Cashflow management isn’t just about having a handle on what’s coming in and what’s going out, it’s also about understanding what future demands may be made on your finances.

Planning your cashflow may take some effort and focus at the beginning, but once you have a process in place, it becomes a lot easier. To make sure your business has the best chance, establish some necessary cashflow habits to help you stay on top of your finances.

Business banking

When you’re establishing your business, finding the right business bank account for you is essential.

One example of a business account that could help you better manage your cashflow is HSBC Kinetic.

HSBC Kinetic offers a business current account that is built specifically for small business owners and includes features like cashflow insights and a forecasting feature to help you plan ahead.

Lay out your fixed costs

You can’t predict every single cost that might fall upon your business within a given month as some things happen unexpectedly and without warning. But, if you have a good understanding of your fixed costs that stay the same each month, you can at least build a picture of what to expect from a financial perspective.

Some examples of your fixed costs include the rent or mortgage you pay on your business premises, salaries, technology subscriptions, energy bills and tax.

Once you know the total sum of these costs, you can forecast a moderate income for your trading year by subtracting this total from your average monthly earnings.

Don’t spend if you don’t need to

It’s a given that you need to plough money into your business to make it work, but that doesn’t mean overspending.

If you have an above average month or your income begins to steadily increase, resist temptation to then spend that surplus cash just because you can.

As we mentioned earlier, unexpected costs can hit your business along the way and without some money saved away, you’ll have to cover those costs using your earnings.

Alternatively, if you save this money into an instant access savings account, you could save enough to cover overheads (fixed costs) for a few months into the future. 

Learn some basic accounting skills

Making time to master some basic accounting skills is a good investment in your business and could even set you up for future success.

And while not every small business owner is savvy when it comes to numbers, fortunately, we’ve come a long way since the days of pen and paper accounting and there are many digital tools to help take away the headache of number crunching.

Basic accounting software could help you assess your current cashflow and make positive future changes. Additionally, with the simple cashflow features found in many savings accounts, you’re just a tap away from understanding your business better, so you can focus on what you do best – running the business that you love.

You can apply for a new business current account in minutes with HSBC Kinetic Current Account. Simply download the HSBC Kinetic app and apply in minutes, with most accounts opened in 48hrs.

Suitable for sole traders or a limited company with a sole director who is also the sole shareholder, find out more at

HSBC Kinetic is subject to eligibility, T&Cs, credit check and fees apply.

This article was written as part of a paid-for advertising content campaign with HSBC.

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