Cash flow management explained for US businesses

In the Federal Reserve Banks’ 2025 Small Business Credit Survey, which drew 6,525 responses from small employer firms between September and November 2025, rising costs of goods, services, and wages¹ were the most common financial challenge of the previous 12 months. Sixty percent of firms applied for financing in that time, and the most common reason they sought it was to meet operating expenses (56%).

While you may know you’ll be able to cover your expenses, sometimes the timing of bills, a large estimated tax payment², or paying contracts in advance can put pressure on your business.

Cash flow management is the practice of managing when money comes in and when it goes out, so you can make sure you always have enough cash to pay your bills, staff, and taxes on time. In addition to having the cash on hand to pay your expenses, better cash flow management can also help you confidently fund growth.

Cash flow basics every business owner should know

Before you can start forecasting the year ahead or planning for growth, it’s key that you understand the core concepts of cash flow management.

Here are some basic terms you’ll need to understand before we get into deeper strategy.

Cash flow statement

A report that shows how much cash has moved in and out of your business over a period. It helps you see whether you’re generating enough cash to cover day-to-day operations. They are often put together monthly, quarterly, and annually with varying degrees of depth.

Cash inflows and outflows

• Inflows refer to the money coming in, like customer purchases, funding, and loans.

• Outflows are the money going out, including wages, rent, vendors, and taxes.

The number one reason people run into cash flow problems is because their outflows are due before their inflows arrive. This means they should have the money to pay, but they don’t have the cash in their account to do so.

Operating and non-operating cash flow

• Operating cash flow comes from your business activities, like the sale of products or services.

• Investing and financing cash flows include asset purchases and borrowing respectively. Under US GAAP, income tax payments and refunds are generally operating cash flows. A refund is not non-operating simply because it happens once.

Separating the two gives you a more accurate view of how your business is performing.

For example, if your cash flow is constantly up due to non-operating cash flow like loans, but you aren’t building operating cash flow from sales, without a new strategy, you will run into problems when your loan runs out.

Cash flow and profit

• Profit shows whether your business is earning more than it spends on paper.

• Cash flow shows whether the money is actually in your bank account.

A business can be profitable but still run into cash flow issues if customers pay late or expenses are paid upfront.

The reverse also happens. Many fast-growing startups run at a loss for years, funded by investors’ money (non-operating cash flow) while they grow toward profit. They have cash, but not profit.

Understanding cash flow forecasting

Cash flow forecasting is one of the most informative tools you can use to help your business stay in control of its finances.

This practice can help you anticipate when money will come in and go out, so you can plan ahead rather than scrambling for cash when bills are due. On top of covering your outflows, a clear forecast can help you make decisions around hiring, investing, or when to make large payments.

Most businesses use two types of cash flow forecasts, each serving a different purpose.

Forecast type	Timeframe	What it’s used for
Short-term	A weekly view of the next three months.	Managing day-to-day cash, covering wages, payroll tax deposits, rent, or vendor payments.
Long-term	Monthly view over the year ahead.	Planning growth, budgeting, funding decisions, and accounting for seasonal fluctuations.

Used together, these forecasts give you both immediate visibility and a longer-term view of your business’s financial position.

How to forecast cash flow (with examples and templates)

The good news is that you don’t need to be a financial genius to put together a basic cash flow forecast. In its most basic form, a financial forecast is a map of all your expected inflows and outflows.

In the US, it’s important to have this mapped out because it helps you make your payroll tax deposits, estimated tax payments, and any state sales tax remittances on time and in full.

To get you started, here’s how you can go from raw numbers to real visibility in a few simple steps.

Step 1: Set up your spreadsheet

Open Excel or Google Sheets and create a table with columns for each week or month (depending on whether you are doing a three-month or yearly forecast), and in the rows list the following categories:

• Opening cash balance (what you currently have in your business account)
• Cash inflows
• Cash outflows
• Net cash movement
• Closing cash balance

Under each of these categories, we will add more detail. For example, under cash outflows, we might add a few rows for wages, rent and utilities, tax, loan repayments, and vendor bills and subscriptions.

Step 2: Gather all your historical data

The best indicator of how your business will perform tomorrow is how it performed yesterday. Pull all your historical data from your accounting software, bank statements, and payroll reports.

Try to include at least the last six to 12 months to get a good feel for your typical income and expense patterns, and any seasonal fluctuations. For example, depending on your industry, December may either be your busiest or quietest time of year. Use this data to fill out your spreadsheet using the averages.

Step 3: Identify recurring inflows and outflows

Add all the payments you make regularly. This could be rent, software subscriptions, employee wages, loan repayments, or anything else that constantly needs to be paid.

You’ll also want to note down the recurring money coming into your business. This is particularly clear-cut for businesses that sell subscription services. It could also be the average sales amount you made across the last 12 to 24 months.

Step 4: Add known future events

You’ll also want to layer in anything you already know is coming up. This often includes payroll tax deposits, estimated tax payments, sales tax remittances, planned purchases, or hiring. The IRS sets each employer’s deposit schedule³ for withheld income tax and Social Security and Medicare taxes: monthly or semiweekly, depending on how much employment tax the business reported in a lookback period. On a semiweekly schedule, the deposit follows each payday within days, so forecast it in the same weeks as wages rather than at quarter-end.

Step 5: Stress-test your forecast

Duplicate your spreadsheet and adjust your assumptions to see how your business will manage different scenarios. Try testing the following:

• Best case: Customers pay on time, sales steadily increase.

• Likely case: Payments arrive as expected.

• Worst case: Large customers pay late, costs rise, or you receive a large (but realistic) unexpected bill.

Compare the closing balances. If any scenario shows cash dropping too low, see how you could adjust previous months to account for the potential shortfall.

Free templates

If you’d rather not build your forecast from scratch, you can download free cash flow templates from these resources:

• SCORE’s 12-month cash flow statement template⁴

• Xero’s cash flow forecast template⁵

Tips for short-term cash flow management

Now that you have all your cash flow forecasted, you can start to employ strategies to ensure you have enough cash on hand to cover upcoming costs. Here are some popular ways to ensure you have enough cash flow in the short term.

Speed up your receivables

Always send an invoice as soon as work is complete. Make sure it has clear payment terms, and follow up consistently. Using accounting software to automate reminders or offering small early-payment discounts can help if you are constantly having invoices paid late.

Manage payables strategically

When possible, negotiate longer payment terms with vendors. Try to schedule these bills to fall right before their due dates rather than paying everything immediately. This will give you more cash on hand when you need it.

Control your inventory

Cash tied up in stock you can’t move could have been used elsewhere. To avoid this, track your inventory turnover and avoid over-ordering, especially for slow-moving items.

Plan for wages and tax

Treat wages, payroll tax deposits, sales tax, and estimated tax payments as fixed outflows in your forecast and set the money aside as soon as income comes in.

Use short-term finance sparingly

Business credit cards or lines of credit might help cover timing gaps, but they’re not a good long-term answer to ongoing cash shortfalls. Don’t lean on them as a part of your business process and instead only use them in emergencies.

Strategies for long-term cash flow planning

Long-term planning is what can take you from month-to-month survival to being able to reinvest in the growth of your business. Here are some strategies that financial advisors use to help businesses plan their long-term cash flow.

Link budgets to your cash forecast

Once you have your budget, you’ll want to connect it directly to your cash flow forecast, since budgets don’t always account for timing. For example, buying more stock at a wholesale price might look affordable, but if it creates a short-term cash gap, you may end up paying more in interest if you need to borrow money to cover that temporary shortfall.

Build a cash buffer gradually

Aim to build a cash reserve that covers two to three months of essential costs like wages, rent, and tax. You don’t need to do this all at once. Instead, set aside a portion of your surplus cash during stronger months.

Diversify how revenue comes in

Relying on one major customer or a single revenue stream does increase your level of risk. Consider moving customers onto retainers, offering subscriptions, or branching into a new industry. For example, a local bakery could start offering corporate catering services.

Review your fixed and variable costs

Go through your costs and separate the ones that stay the same every month from the ones that move around (like contractors or ad spend). This makes it much easier to see where you have room to slow spending during quieter periods, without putting day-to-day operations at risk. Our guide to cost controls covers how.

Set times to review your forecast

Update your cash flow forecast each month to reflect any changes in income, costs, or timing. It’s also helpful to do a deeper review each quarter to check whether your strategy is working and to spot any upcoming cash flow shortfalls early.

Tools and tech to support cash flow management

You would be hard-pressed to find a business in the US that doesn’t use some form of technology to manage its cash flow. Here are the common types of technology businesses use and how they help.

Tool	What it’s useful for
Spreadsheets	These work for small businesses, simple forecasts, short-term planning, and quick scenario testing. They can be flexible, but require manual updates.
Accounting software	These tools can automatically track inflows and outflows, reconcile accounts, and generate cash flow reports from real data. This adds an extra level of insight.
Forecasting software	Specialized tools for forecasting typically use live financial data to make forward-looking forecasts and run scenarios with less manual effort.

At Visory, a dedicated team runs your bookkeeping, payroll, accounts payable and receivable, with its AI, Delphi, overseen by that team. You can see your numbers on the Visory platform, and Visory Insights gives you a plain-English monthly read of them, walked through with a Business Performance Partner who helps you turn them into decisions.

When to seek expert help

Managing cash flow on your own can work when your business is simple and stable. However, as things get busier or more complex, it’s easy for forecasting and planning to fall behind.

It may be time to seek support if you’re short on time, want greater peace of mind, or have bigger plans you’re working toward, like expanding your headcount, entering new markets, or investing in growth. We also recommend getting help if your cash flow feels unpredictable, reactive, or if you’re relying on rough estimates instead of your actual numbers.

If you’re curious how expert support could give you clearer cash flow visibility and more confidence in your decisions, book a discovery call.

Taking control of your cash flow

Cash stress can come from insufficient revenue or margins, as well as the timing of receipts and payments. Check both operating performance and payment timing before choosing a remedy. Through understanding how cash moves through your business, you’ll be able to forecast realistically and put both short and long-term strategies in place.

If you’re ready to have visibility over your cash and support planning for what’s next, Visory can help. Our team works alongside you to turn your numbers into insight.

See how Visory works in practice, or read more about our bookkeeping services.

FAQs

How much money should I have set aside for my business?

A common rule of thumb is to have enough cash on hand to cover two to three months of your essential expenses. For bigger businesses or in industries where there is a lot of fluctuation, you may want to have six months set aside.

How do US businesses manage their cash flow?

Most US businesses use a mix of cash flow forecasting and budgeting to make sure they have cash on hand when they need it. This often includes tracking inflows and outflows monthly, and putting money aside in advance for tax and wages.

How do you make sure you have enough money set aside for taxes?

The simplest approach is to set aside payroll taxes, sales tax, and income tax as income comes in, rather than waiting until a deposit or payment is due.

Many businesses move this money into a separate account and use a cash flow forecast to estimate upcoming payroll tax deposits, estimated tax payments, and sales tax remittances well in advance, so there are no surprises when deadlines arrive. The IRS divides the year into four estimated tax payment periods, each with its own due date².