Keep Your Business Cash Flowing: Smart Working Capital Tips for MSMEs
Running a small business is tough — but running out of money makes it tougher!
Common Mistakes MSMEs Make
Many small businesses lose money or face cash crunch because of these mistakes:
- Overstocking raw materials or finished goods
- Giving long credit to customers but paying suppliers quickly
- Mixing personal expenses with business cash
- Not forecasting upcoming payments like GST, TDS, EMIs etc.
Here are Simple Tips to Manage It
Keep a Daily Cash Record
Always know how much money you have in the bank and how much you need to pay this week.
Collect Payments on Time
Do not give too much credit to customers. Remind them to pay on time. Offer a small discount for early payment.
Pay Suppliers Smartly
Negotiate better credit days with suppliers, but don’t delay so much that you lose trust.
Check Stock Regularly
Do not keep too much raw material or finished goods. Extra stock blocks cash.
Use Bank Limits Wisely
If you have a working capital loan or overdraft, use it only for business needs and also don’t use it for CAPEX. Renew your working capital on time.
Plan Ahead
Make a simple cash flow plan for the next 2–3 months. Write down expected money coming in and going out.
Extra Smart Steps
- Try invoice discounting if customers take a long time to pay.
- Keep business and personal expenses separate.
- File GST and TDS on time — it helps keep your bank loan limits safe.
CA Ami Desai, Partner
.jpg)
.jpg)