Cash Flow Management: Keeping Your Business Alive

More African businesses fail from cash flow problems than from unprofitability. Cash is the oxygen of a business — a profitable business with no cash in the bank is as dead as an unprofitable one. Understanding the distinction between profit and cash flow is the most important financial concept for any African entrepreneur to master. The 13-week cash flow forecast is the operating tool of cash management. It works as follows: list every expected cash inflow (customer payments — note: not invoices raised, but cash you actually expect to receive) by week for 13 weeks; list every expected cash outflow (supplier payments, salaries, rent, loan repayments, tax) by week; calculate the closing cash balance at the end of each week. Any week where closing cash goes below zero is a crisis point — identified thirteen weeks in advance, giving you time to act. Managing receivables: in African B2B markets, 30-day, 60-day, and 90-day payment terms are common. A business supplying a large corporate or government entity may wait 90 days to receive payment on a completed contract. Strategies: require a deposit (30–50%) before commencing work; invoice immediately upon completion, not at month-end; follow up invoices proactively at 7, 14, and 21 days; offer a 2% discount for payment within 7 days; for government clients, factor the cost of late payment into your pricing. Managing payables: negotiate extended payment terms with suppliers where possible — this is free financing. A supplier offering 60-day payment terms rather than 30-day is giving you an additional month of float. Protect these relationships carefully; they are a form of working capital facility. Seasonal revenue: many African businesses (agricultural input suppliers, retail, events) have highly seasonal revenue. Build a cash flow model that maps the seasonal revenue pattern and identifies the months of maximum cash need — typically in the trough before peak season. Arrange an overdraft facility or line of credit before the cash trough arrives, not during it. Invoice financing and factoring: when a B2B business has valuable invoices from creditworthy customers but needs cash now, invoice financing providers (Lidya Nigeria, Duplo, MarketForce in Kenya) advance 70–80% of invoice value immediately. The fee is typically 2–4% of invoice value — expensive, but often cheaper than missing payroll or a supplier deadline. --- *Track 1 — I am just starting out · Foundations of Finance · Article 29.* Browse related [funding opportunities](/opportunities) on MaxWith filtered to your country and sector.