Every retail owner knows that cash is the core of their operation. However, due to the daily expenses associated with running a business, as well as those unexpected, yet unavoidable costs that emerge, many entrepreneurs may find themselves in a situation where they’re suffering from a serious cash crunch.

Luckily, there are a number of business funding solutions that can help you survive a cash deficiency, as well as some best practices you can implement for better cash flow management in the future. Use these tips to oil your moving parts and scale your operations.

What is Cash Flow? 

Some people think that “cash flow” refers to the amount of money flowing into and out of a business. This is true, but the term also refers to timing — when cash is coming in and out.

While you may have $5,000 in profits for the month on paper, if those funds aren’t available right away and you don’t have that cash actually on hand, you won’t be able to meet daily operating expenses that are critical to running your business. 

Mastering cash flow management is the key to  keeping your lights on and your retail machine running smoothly. 

Cash Flow Management Tips for Retailers

Below, are seven pieces of advice for managing cash that, when consistently followed, will help you maintain and improve your retail operations. 

Tip #1: Thoroughly Research Your Business Funding Options

It’s time to replenish your inventory. You’re about to use your business credit card. But, your promotional rate has ended and you’ll end up paying 20% interest if you go this route. To get the most from your cash flow, you need to examine all of your options. 

Have you looked into term loans with a low fixed interest rate or reached out to the Small Business Administration (SBA) to see what funding options are available? Small business loans through the SBA have an average interest rate between 4.39 and 7.01%, which can come out to less than ¼ of what you would eventually pay if you opt for a credit card instead.  

Tips #2: Inform Yourself About Business Tax Changes Every Year (and Maximize Your Tax Efficiency in General) 

As a retailer, it’s central to your cash flow management processes that you’re informed about any changes to your tax requirements for the upcoming year. This will help you make informed decisions, and avoid penalties or interest you may have to pay if you’re audited at a later date. You never know — this could save you thousands of dollars and increase the amount of cash your business has on hand. 

Hiring a tax professional can provide you with the peace of mind that you’re staying compliant, as well as advice on the best ways to minimize your tax obligations and save money. 

Bonus Tips: Make your estimated tax payments quarterly to avoid unnecessary penalties and interest.  

Tips #3: Pay Close Attention to Projected Revenue Highs (and Lows) 

All quality retail business plans include a section for projected revenue. While you can never foresee your reveune with 100% accuracy, it will help to be aware of the times when you expect to earn more money than usual. 

Factors to consider: 

  • Holiday traffic and sales
  • Retail promotions and contests
  • Decreased business costs

It’s important to perform financial forecasts, especially a cash flow analysis, on a regular basis. This will help you plan for any ebbs and flows in business, and adjust the mechanisms of your operation accordingly — creating a budget to keep your operation afloat during the slow season, and building a cash cushion so you can effectively prepare to maximize sales for the busy season. 

Paying attention to predictions about income increases (as well as decreases) can give your cash flow management an edge. 

Tip #4: Balance Payroll With Your Quarterly Business Income  

Most retail businesses sell more in Q4 than they do the rest of the year. So, why are you employing the same amount of staff throughout the year? As a retail business owner, it’s critical to balance your payroll with your income. 

You can either hire seasonal workers during the busy seasons — for toy sellers, this will probably be in the winter, and for lawn maintenance supply companies, it will be summer —  or consider automating some of your more tedious processes with software solutions. The bottom line is you need to pay attention to your quarterly income, and cater your staffing needs to your revenue. 

Tip #5: Optimize Your Inventory Management Processes  

The bread and butter of your retail business is your inventory. Human error is the most frequent cause for order fulfillment issues, which can cost your company dearly. If a potential customer tries to make a purchase and you aren’t able to deliver, you may have lost them forever. 

So, take the time to optimize your inventory management processes using software or by educating your warehouse staff and you will, in turn, see improvements in your cash flow management; this can save retail companies thousands of dollars and increase revenue through customer satisfaction and retention. 

Tip #6: Learn From Your Customers — Shop for Bargains

You know that getting customers to pay full price for an untested product is almost impossible. So, why are you just taking expenses as they come? Well, now is the time to stop. 

Just because you’re a business owner doesn’t mean you should be frivolous. Yes, you should have the best of the best. But, you should have it on your own terms. Shop around for the right software, real estate, and suppliers. See if your vendors will cut you a deal of stocking up on inventory in bulk. 

You never know how much money you could save if you find the right deal. For example, if you can save just $50 per month on your POS system, you’ll have an additional $3,000 after five years. 


Managing your retail cash flow isn’t rocket science, but you need to be strategic. So, research your borrowing options and pay attention to tax changes that will affect your operations. Watch your revenue spikes and dips, then hire according to your income. Optimize your inventory management, shop for deals on business expenses, and look closely at loan terms when consolidating debt. 

These tips will not only keep you organized, but help you avoid cash flow problems in your business for the long-haul.