How to keep track of cash flow

More than ever, cash flow is a key issue for small businesses, and understanding it is crucial to making informed decisions at the right time. The government will be asking businesses to demonstrate that they have an understanding of the state of their cash flow as it stands, and in the future before allowing access to the grants and schemes being offered.

With so many outgoings, it can be hard to keep track. Even before the COVID-19 outbreak, just 46.5% of small businesses in the UK were cash flow positive (Xero’s Small Business Insights, Jan 2020). We have put together some tips to help SMEs keep on top of their cash flow in challenging and uncertain times like these.

Create a cash flow forecast

A cash flow forecast will help you to predict how your business is going to perform for a selected period of time. With so many questions on when this pandemic will end, it might be best to forecast up until the end of 2020. 

Revenue is the first factor to consider. For a lot of small businesses, the reality is that you’re taking in less sales than you would under normal circumstances. Making realistic revenue projections based on customer buying habits in the last few weeks will be the first step in creating a cash flow forecast. Then it’s important to consider how much of this will actually go into your business’ pocket.

Next to consider is expenses. Go through a typical month or year in your business and list out all of the predicted expenses that are going to come out of the bank account. Also, ask yourself some questions which you may find hard to answer, like: if my sales dip by X amount, can I still pay my staff? 

Use cash flow apps to support

There are lots of great apps out there which can help you pull together vital cash flow insights - many of them sit in our 800 strong community of app partners. For example, Float - a tool which gives businesses a real time view of cash flow - is matching their customers with a group of Xero’s accounting and bookkeeping partners, who will provide assistance and advice free of charge. 

UK app Chaser automates invoice chasing and streamlines the credit control process, to help businesses get paid on time - which is more important than ever right now. You can find out about more cash flow apps which might be helpful here

Review and renew

As new developments on the pandemic are announced every day, circumstances are constantly changing. This means that you will need to consistently review your cash flow forecast in light of the latest news.

For example, if a new lockdown procedure affects how a supplier will get stock to you, this will need to be reflected in your cash flow forecast and profit and loss reports. To ensure that these steps become part of your routine, set aside a few hours every week in your diary to complete the updates.

Regular communication between you and your staff will also ensure these reports remain accurate, and as mentioned, this will be vital when asking for government support.

Support from banks and the government

To keep small businesses tracking positive when it comes to cash flow, the government and banks are offering their support.

The government has announced the Coronavirus Business Interruption Loan Scheme, in which  ‘any viable business’ with a turnover of up to £45m will be able to apply to banks for a 12-month interest-free loan, 80% of which will be guaranteed by the government. For those on the small business or rural rates relief, there are also grants being offered, as well as some for the specific retail, hospitality and leisure sectors. You can find out more about these schemes here. HMRC are helping businesses who are struggling with paying taxes with a Time to Pay service.

In addition, UK banks including Royal Bank of Scotland, Lloyds and TSB are all offering repayment holidays on loans and mortgages. 

Seek advice

If you are feeling overwhelmed, unsure about a decision or confused by what the government is offering, you should seek advice. This might be an accountant or someone you usually turn to when seeking business advice. Xero’s Business Community Hub also contains a range of practical tools and education resources to support small businesses and their advisors through this incredibly challenging time. This includes a number of webinars on things like furloughing staff and online tools to run your business.

Startup Details

Startup Details



Xero is a suite of online accounting software for small businesses, accountants, and bookkeepers. It enables its users to track and manage cash flow processes, invoicing, payments, reporting, and pay runs. Users can use Xero through any one of its three monthly subscription packages: starter, standard, and premium. The software solution is available on iOS and Android platforms.

  • Headquarters Regions
    Wellington, New Zealand
  • Founded Date
    Jul 1, 2006
  • Founders
    Craig Walker, Gary Turner, Hamish Edwards, Rod Drury
  • Operating Status
  • Number of Employees