Tips For Improving Cash Management

Cash is king when it comes to running your business. Having as much cash on hand is essential for a business to stay healthy and thrive. For many businesses, they run into issues managing money due to lack of planning and large bills depleting their accounts rapidly.

We wanted to offer a few tips that may be helpful for your business to help you simplify cash management issues and take control of your finances like never before. As a note, these are some suggestions that are easy and helpful. Please note that SENPA does not endorse any particular budgeting service, app, or framework.

Cash Flow Organization

When it comes to organizing cash, many business owners simply don’t plan ahead even for bills they know come every year (taxes) and then they panic and scramble to get their cash together. This is a simple idea to help you be prepared as well as make sure you have a safety net.

Create 4 checking accounts:

  1. Operating Expenses
  2. Taxes
  3. Profit
  4. Personal checking (For Store Owners)

Then after you create these accounts, here’s how you divide up the money.

  1. All money you receive from your customers goes into the operating expenses account. This is your main account.
  2. Out of your operating expenses you pay all your bills, payroll, and yourself.
  3. Determine how much money you need for your monthly operating expenses. For the sake of easy math, let’s say, $100,000. If you make $150,000 in sales then do the following.

    Of the excess of your operating expenses, split it in half between the taxes and profit accounts. So in this scenario, put $25,000 in your taxes account and $25,000 in your profit account. You may be over prepared for taxes and not have to deplete the whole account when it’s time to pay the government, so you can get yourself a little bonus.

    This way, if you ever mismanage the operating expenses account, you have the profit account as a safety net so you can move money back into operating expenses if needed. If you have to move money over from profit to operating expenses more than a few times a year, that will serve as a warning light that you either are spending too much or that maybe you actually need to increase your operating expenses threshold because you’re doing really well and might need to pay more in payroll than before.

  4. The last one is your personal checking account. Pay yourself out of payroll and live off of that. If you own the business, the profit money is also yours but remember, that is the safety net for operating expenses, so manage it wisely. Protect the business at all costs.

Analyzing Your Money

Once you’ve gotten your ducks in a row when it comes to moving your money around and knowing where everything needs to go, the logical next step is to see how efficiently your money is working for you.

There are 3 categories that should be reviewed on a regular basis.


By looking at your revenue frequently, you’re able to see trends in your sales. Do you get a huge surge in the first part of the year? Are summer months slow but when you run a special do they increase? These are all things that are important to know so you can plan specials, plan for months with less cash, etc.


This is your revenue minus your expenses. Maximizing profit is where budgeting for your business is a crucial step. Every business has their margins that they have to operate within to stay profitable. By understanding these numbers well and how much you’re spending each month in expenses, you are going to be able to have a really good picture of the health of your business.

There are tons of budgeting apps and software available out there for you to utilize. The key with budgeting is to revisit it often and adjust along the way. If you’re pretty well established, it should be fairly easy to plug in your numbers each month since there is some predictability. If you are a newer business, this may require a lot more guessing and tweaking.

One very popular type of budgeting is called “Zero Based Budgeting” where you assign every dollar a name each month so your budget ends at $0. This doesn’t mean you’ve spent every dollar, but you’ve told every dollar where to go, even if it’s to a tax, savings, or profit account.

Profit Per Employee

This is something to do on more of an annual basis. It is calculated by profit divided by employees. This lets you know how efficient your money is working for you. Though employees are people and incredibly valuable for that reason alone, they are also investments in your business. Like any investment, you want to make sure you are getting a good ROI. If your profit per employee is low, then it may be a red flag that you’re overstaffed or have employees that may need to work harder.

We’re Here To Help

As an association, we’re here to provide you the tools you need to help your business thrive. Our network of resources is vast and if you have specific questions, we can likely help connect you with someone in our membership that can help.

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SENPA is a non-profit organization with a core focus on strengthening the success of independent natural retailers and aligned manufacturers, while nourishing their human connection with consumers. We are a leading voice, supporter and advocate for the natural-products industry, rooted in the experience of enhanced health and the power of personal relationships.

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