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Cash Flow Control for UK Small Businesses: The M.A.P. Method  Cash Flow Case Study

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A shocking 57% of UK small businesses according to “The State of Small Business Cash Flow” by Intuit QuickBooks face cash flow problems so severe they lead to overdraft, threaten to shut down the business entirely.  If the constant struggle to pay bills and meet payroll keeps you up at night, you’re not alone.

But there’s a way to take back control.

Let me introduce you to the M.A.P. Method, a proven system for cash flow clarity and controlling cash flow to build financially stable business.

Cash flow control is one of the constant thing that is on top of minds of my clients who are small business owners and entrepreneurs based in the UK.

In fact, It reminds me a conversation with a dental practice client doing seven figures patient income. He said , cash flow clarity and control are always on top of his mind. 

Whether you are a  startup or an established small business owner or entrepreneur selling physical goods or services, if cash flow control is your current concern right now then you are in the right place.

In this cash flow case study, I will introduce to you the The M.A.P Method of cash flow control.

I will show you how you can implement my propriety process – The M.A.P Method to control your cash flow with an example.

I am a chartered certified accountant based in London, UK and I have worked with hundreds of businesses doing annual revenue range of £40k to £53.8m over the last twenty years . we serve my clients through my company Hungry Cash Flow Ltd.

As a chartered certified accountant, I’ve seen firsthand how many UK businesses struggle with cash flow.

From my experience of working with my clients, most of them either are facing late payments, seasonality, low profit margin issues. I am going to show you  how one of my clients implemented The M.A.P Method to overcome with these issues.

Key Takeaways

    • Cash flow management is the foundation of control in your business. Prioritizing it reduces financial stress and allows for better decision-making.

    • The M.A.P. Method provides a structured approach:
        • Manage: Track cash flow diligently to maintain a minimum balance that ensures your buffer of at least 3-4 months’ expenses.

        • Analyze: Regularly scrutinize your cash flow statements to identify trends, spot potential hazards (like cost increases), and uncover growth opportunities.

        • Project: Use past data and market awareness to forecast your cash balance, guiding informed decisions about spending and investments.

    • Consistent cash flow analysis builds clarity, certainty, and confidence. It enhances your ability to communicate with investors and lenders.

The M.A.P Method Of Cash Flow Control Explained

When it comes to controlling cash flow, there are three key actions to take:

There are three keys action to take:

    • Managing Your Cash Flow (which you can remember with the letter M)

    • Analyzing Your Cash Flow (that you can remember with the letter A)

    • Projecting Your Cash Flow (You can remember with the letter P)

Because of these letters, I call it the MAP Method of Controlling the cash flow.

Let’s understand deeper how cash flow Management works an how does it fit in cash flow control.

M = MANAGE

I learned to drive a car in a very quiet place with no one around. There was no traffic. It was just me.

At first, I had to learn to control the car using gears, the steering, clutch and accelerator, brakes and everything. When I was comfortable controlling the car, I became comfortable moving ahead.

You do the same in your business by learning to manage cash flow.

Because managing cash flow means understanding where your money goes, Heather’s first step was to get a handle on her regular costs. Heather created a simple budget to track her fixed expenses and ensure they stayed under control.

Because:

CASH FLOW MANAGEMENT = CASH FLOW CONTROL

And:

CASH FLOW CONTROL = CONTROL IN YOUR BUSINESS.

A = ANALYSE

Once you know how to control the car, you want to get on the road and drive slowly. At that point, your ability to scan the road analyze the situation is important. Otherwise, you may run into an accident.

Similarly in business, you’ve got to analyze cash flow and understand what has happened in the last three months, last six months, and last year. When you analyze and understand the past happenings in your business, you can avoid pitfalls and cash problems.

You will notice patterns and trends. This will help you anticipate what is going to happen with your cash flow in the coming month. You can use your understanding to project cash flow. We’ll talk more about it in the next step.

P= PROJECT 

Once you analyze cash flow, you get in a good position to project your cash flow. You know what has happened in the last three or six months. With this information, you are in a good position to predict your cash flow for the next three or six months today.

Now you know how the MAP method works and just need to implement it.

You don’t have to understand it on your own

I’ll be with you for some more time and help you understand it with the help of examples of some of my clients who have implemented the the M.A.P Method.

Example of M.A.P. Method  Implementations

In this section, I will share with you, how some of my clients have implemented the M.A.P. Method to control their cash flow. I have picked diverse sectors, size and situation so that you can relate to your current specific situation.

Ruth’s Seasonal Landscaping Business

Ruth owns a marketing business specializing in tourist attractions businesses in  Hammersmith, London.  As the tourist attraction is seasonal , her work was more project based running specific marketing campaigns.

Cash flow was a rollercoaster until she implemented the M.A.P. Method.

By ANALYZING historical transactions, she spotted the lean months and started setting aside reserves when business was booming. PROJECTING cash needs for hiring extra freelancer to deliver the services on time.

 Now, instead of stress and anxiety Ruth feels in CONTROL.

Ruth’s Quote: “Before working with Shishir and his team managing cash flow was a nightmare. Now, I have a solid system. which is simple for me to understand and implement in my business.  I know when to save, when to invest, and I don’t dread the slow months anymore.”

Amarjit’s Web design company

Amarjit was struggling with late payments even though the invoices were sent on time. To add an extra burden, he had to pay freelancers and salaries before he was paid.

Analyzing his cash flow showed that long delays in getting paid were hurting his ability to order parts and pay his own suppliers.

He started MANAGING cash flow aggressively, offering small discounts for upfront payment and actively following up within a week of the invoice due date. This boosted cash inflow, and PROJECTING let him set a clear policy on extending credit, improving stability without turning away customers in need.

Amarjit’s Quote: “Cash flow was choking my business. Shishir’s M.A.P. Method helped me turn things around. I’m not just surviving, I’m making plans to expand thanks to better control.”

Example Of The M.A.P Method Implementation- Heather’s Marketing Coaching Business Cash Flow Story 

An example from her business will help you see the M.A.P. method in action, and give you clarity on how you can implement it in your business.

You’ll see how by implementing the M.A.P. method, Heather moved from an £80k cash balance on 1 Jan 2021 to £180k at the end of March (31st) 2021. Heather improved her cash flow by streamlining her collection process

Let’s Start In The Beginning

Jan 1st, 2021 – the first day of the year and also the first day of a new financial year.

And, Heather is excited to start with a bang.

Her accountant brought forward the balance of £80k cash to start with.

Heather’s trading experience reveals January is one of the biggest months of the financial year. She knows that based on last year’s figures, she needs to have at least £150k in the bank every month otherwise she will start to feel concerned and worried about her cash position.

She wants to cover at least 3-4 months of fixed expenses if the business does not perform as expected. So she is cautious about how she spends cash in the business. She’s been keeping an eye on cash flow, especially weekly cash outflow, to make sure she reaches her monthly cash left balance goal of at least £150k.

Cut To Month 2 Of The Year. 

It’s 2nd Feb 2021, and Heather has just reviewed the cash flow statement that her sent over. It shows cash received in Jan was £158,750, and cash paid out was £85,000. The accumulated balance of £153,750 (on Jan 31, 2021) net £73,750 is from January and £80,000 carried over from December.

Fixed expenses and cost of fulfillment were £50,000 and £35,000, respectively.

Heather MANAGED her cash flow well. This ensures that her cash balance is just above £150,000. So, she achieved the target of keeping a cash balance of at least £150,000 at all times.

She has been able to control her ‘business’ vehicle, i.e., manage cash flow for January. By doing this Heather implemented the M of M.A.P. Method.

Cash flow under control, Heather now wants to dig deeper.

For this, she needs to ANALYZE her January cash flow statement. She can see in the statement that her business collected most payments, £65,000 out of £158,750 total, for the mastermind. Thanks to this insight, she is now committed to selling more mastermind programs in the future.

In terms of cash outflow, she paid £50,000 for fixed expenses and £35,000 for the cost of fulfillment. However, she noticed that the fixed costs have increased by £10,000 since December 2019.

She is concerned that her monthly fixed costs have increased and will hurt cash flow. She is also glad that she did this exercise; otherwise, she wouldn’t have figured out two important things:

(SPOTTING HAZARDS and OPPORTUNITIES)

    1. She needs to spend her time and energy on selling masterminds

    1. She needs to analyze why fixed expenses jumped by £10k in January and what she can do about it.

Now that Heather has analyzed her cash flow she moves to the next important step in the MAP method which is PROJECTION.

To project cash flow in February of 2021, she reflects on current market conditions as well as looks at cash flow in previous months.

She looks at the Debtors’ reports. This report shows that customers owe her £100,000 today, out of which £85,000 is due by February.

She also looks at the Creditors’ report, and it shows she owes them £80,000 as of today. So she selects the suppliers and the respective balances to pay for £75,000.

So she updates the cash flow projection statement like this:

1st Feb 2021 opening bank balance- £153,750 (It’s the same as closing balance 31st Jan 2021)

    • Cash to collect from customers in Feb – £85,000

    • Cash to pay in Feb – £75,000

    • Cash left projected balance- £163,750

TIP and Action Plan

Look for seasonality. Every business has up and down season. 

You can use this cash flow analysis spreadsheet template to do so easily and quickly.

Let’s Meet Heather Again In March. 

It’s 1st March 2021, today. And her has sent her the cash flow statement for February.

In Feb, there were cash receivables of £80,000, out of a possible £85,000. And the business paid out £75,000 as projected, so the cash balance was at £158,750 instead of £163,750.

She goes through the M.A.P. methodology again to understand how well she has managed cash flow in Feb. Next, she does further cash flow analysis of the differences compared to Jan 2021. Then she projects cash flow for March.

It’s 1 Apr 2021.

In March, Heather’s business generated a cash inflow of £101,250 The business paid out £80,000, So that leaves your cash balance at £180,000 at the end of March.

You can see how her cash flow balance moved from £80,000 in cash flow balance on Dec 31, 2020, to £180,00 on March 31st, 2021.

Now Heather has three months of cash flow statements month by month. So not only can she review what’s going on every month, but she can also use the cash flow movement that has happened in the past quarter, Jan to March, as a base for subsequent quarters.

To do this, Heather analyzes the cash flow statement for Q1 2021.

Among the many patterns of cash inflow and cash outflow, one thing is very noticeable. She notices that Mastermind is selling more because she switched from Google ads to Facebook ads in the middle of January 2021 and it worked really well for her.

She feels the power of using a cash flow statement has given her clarity, control, certainty, confidence, and the ability to communicate her business numbers.

Let’s see how.

Heather’s Results and the Power of Cash Flow Control

Heather Found Cash flow Clarity

Because now she knows about the products she needs to focus on. She clearly understands her fixed expenses per month, and she knows whether she has enough to cover for the next 3-4 months if sales slow down. This understanding will save her business from a collapse like 82% of small businesses that go down because of cash flow problems.

Heather Feels in Cash flow Control

Because she now stays on top of cash payments every week. She has cash outflow under control. She also knows, every month at the beginning of the month, how much cash to collect by the end of each month. She can delegate the job to ensure it happens. All these insights and resulting actions have ensured that the closing bank balance every month stays above $150,000.

Heather Is Certain

She has been going through a cash flow statement every month to manage, analyze and project cash flow. Thanks to this, Heather’s ability to project cash flow and predict future cash balance today has improved significantly. This has provided her with certainty in her business. She can now rely on future cash inflow to cover future cash outflow. And, she can sleep soundly at night without worrying about what might happen in the future.

Heather Can Communicate Numbers

Thanks to being up and close with numbers and understanding them like never before, Heather can now talk the language of business in terms of cash flow and profit. With this newfound ability, she can reach out to investors and raise funds to grow her business if she wants to.

When talking to investors, she can communicate her value proposition better to investors.

When talking to a bank, she knows how much she needs to borrow, if she needs to borrow, and when and also for how long.

Heather is in this position because she chose to work with a profit and cash flow coach as soon as she realized she didn’t know numbers in her business well.

Her ability to talk numbers well has made life easy for both her cash flow coach and her. They can have meaningful conversations when discussing the finances of Heather’s business because now they both know exactly what they are talking about. Heather no longer has to pretend she understands something when she doesn’t.

Heather Is Confident

Heather’s confidence is soaring high by learning to manage, analyze, and project her cash flow.

She is now a confident cash flow entrepreneur who knows what’s going on with her cash flow at all times.

She can now take crucial decisions that are not based on her hunch alone but are grounded in numbers. She just decided to hire a helping hand to free up her time. She knows she is still within the projected cash flow balance, and she still is covered for the next 3-4months. She is calm. There’s peace of mind as there is no longer a fear of the unknown and failure.

Not only was Heather’s business more profitable, improving her free cash flow, but the greater financial stability allowed her business to grow.

Heather is happy to have found the M.A.P. Method on time .

How UK Businesses Can Get Started?

You can be the next cash flow champion like Heather. 

You can have the same clarity and certainty as her.

You can be confident in knowing your numbers and feel in control of your business.

You can raise funding if you want to unlock the hidden value in your business.

And more than anything, you can survive when times are tough and thrive when times are good.

Won’t you like that?

If you prefer to watch the video about how Heather became a confident cash flow entrepreneur, then here’s the link.

You can check out how to have cash flow control training in this site . You can do this, without needing an accountant.

For further help to get further insights into cash management strategies,  you can join my community of Hungry Cash Flow for FREE.

Conclusion

Heather’s story proves that even without deep financial expertise, UK small business owners can transform their relationship with cash flow. The M.A.P. Method offers a simple and effective framework for achieving this. By diligently managing, analyzing, and projecting cash flow, you empower yourself to:

    • Minimize financial stress by staying on top of your cash position.

    • Make proactive decisions grounded in data, not guesswork.

    • Increase resilience against economic downturns or unexpected expenses.

    • Pursue growth opportunities with clarity and confidence.

You don’t have to struggle with cash flow uncertainty. By adopting these principles, you can take control and unlock the financial stability your business needs to thrive.

FAQ's

EXTERNAL RESOURCES

You can learn how many resources specifically for UK businesses are available on gov.uk to help manage cash flow challenges. https://www.ons.gov.uk/businessindustryandtrade/business/businessservices

For industry-specific cash flow tools and guidance, explore the resources offered on the British Business Bank’s website https://www.british-business-bank.co.uk/finance-hub/

Author Bio

“Shishir Khadka is a Chartered Certified Accountant with over 20 years of experience helping UK small businesses achieve financial stability. He founded Hungry Cash Flow Software  to empower business owners to take control of their cash flow.”

Testimonial from Dr. Manish Chitnis

“Before working with Shishir from Hungry Cash Flow , my cash flow was a constant source of stress. I never knew if I’d be able to pay my suppliers or even myself.  The M.A.P. Method  helped me to understand my income statement, so I could improve profitability and stop relying on my overdraft! I can make confident decisions about my business and sleep better at night!” – Dr Manish Chitnis Dental  Practice Owner, [Andover, UK]

Shishir Khadka, qualified as a chartered certified accountant in 2009. He is the creator of cashflow hub– the world’s most comprehensive cash flow resource online and is one of the UK’s leading cash flow specialist who helps busy business owners and entrepreneurs generate more profit and create consistent positive cash flow without over relying on getting new sales.

He has delivered a masterclass to a global software Zoho’s audience to create consistent cash flow. He has written articles for floatapp– one of the leading cash flow software and has also been featured in the major publications such as Independent. He has been sharing his learning and insights on his youtube channel.

He wrote about his learnings from helping an e-commerce client scaled the business cash flow positive from £500k to £1.6m in four years in “The Three Key Obstacles to Faster Growth: How You Can Overcome Them Using Cloud Accounting.

In his career spanning 18 years as the cash flow specialist, he has helped businesses of all sizes, ranging from £40K to £40M.