Denied a Loan? Managing Your Cash Flow Can Help

6 Ways to Start Managing Your Cash Flow

Almost half of the small business owners who are denied financing get turned down more than once, and 23 percent don’t know why their applications were denied. But entrepreneurs who understand their business credit scores and ratings are 41 percent more likely to be approved for a business loan.1

If you were recently denied funding, your business credit may have played a role. Managing your cash flow can help positively impact your business credit and also help you continue running your business despite being turned down for financing. Here are six ways to start managing your cash flow and impacting your business credit.

How to Manage Your Cash Flow and Impact Business Credit

1. Define Your Credit Policy

A credit policy should include a set credit limit, the full terms of your policy, any deposit requirements, what types of payment you take (checks, credit card, etc.), and the customer information you require. Checking a vendor’s commercial credit file through Dun & Bradstreet before extending credit can help you avoid working with a company that pays slowly or help you decide what credit limit to extend.

2. Assess and Estimate Fixed and Variable Expenses

In order to build and maintain cash reserves, you should first assess your fixed expenses (expenses you know are going to be constant). Next, estimate variable expenses, which fluctuate in occurrence and amount. Variable expenses can pop up unexpectedly, so spend more time on this and try to nail down as many as you can. Once you build substantial reserves, you’ll be able to accommodate unexpected expenses without having to use a credit card or personal assets. 

3. Plan How and When Your Customers Pay You

Consider putting your customers on a payment plan so that you know when to expect a payment. Take note of any credit card processing rates – these need to be part of your cash flow calculations. Consider automatic renewals, which can help prevent service lapses and keep your cash flow steady. And don’t forget to invoice early! Some companies have lengthy payment schedules – if you don’t invoice early, you may not be paid on time.

4. Start Forecasting

Cash flow is something that you need to forecast. Do this often! Anticipate when you may get a windfall of revenue or a challenging period with less revenue. Make sure to look at income, expenses, and any surpluses or deficits. When forecasting, don’t forget to take seasonal fluctuations into account. As you make these assessments, don’t fall into the trap of being too optimistic. 

For seasonal businesses, cash flow can be really tough: Suppliers might expect you to pay sooner than your customers pay you, for example, but you can ask for a payment plan that allows you time to first get your customers’ payments. And if your existing credit card company agreement requires that you have a monthly minimum, even during your slow time, you might want to shop around for an agreement that better suits your business needs. When working with vendors, smaller orders often cost more per item than larger orders. It may be worth the greater upfront cost to place a larger order if you can do so without incurring additional costs.

5. Get Professional Help

Many business owners dislike managing the finance and accounting aspects of a company. The good news is, you don’t have to do it alone: Consider hiring a bookkeeper – someone who will be detailed about your finances, use bookkeeping software, and regularly reconcile your numbers. You can also consider hiring a professional to do your taxes.

6. Pay Your Creditors On Time or Early

Prompt payments are not only important for building relationships with your vendors but can help build your business credit as well. Having strong business credit may help you get a loan the next time you apply and may improve your chances of negotiating better payment terms or interest rates.

If you’ve been denied funding – or even if you haven’t – cash flow management should be a top priority. When you take control of your cash flow, you will be better situated financially and can help take care of those who depend on you, especially your employees. Well-managed cash flow could also help impact your business credit and prepare you for future loans, helping you grow your business.


1. “American Dream Gap Report,” Nav, 2015.