Using cashflow for cost control

Whether your business is in growth mode or recovery mode, cashflow is a vital part of staying in business.

Profit, your bottom line, income streams and outgoing expenses all have importance when we are back to “normal” (however “normal” is going to look) so now more than ever cashflow and keeping everything running should be the priority. Regular cashflow forecasts will help you keep that in focus. Here’s why:

Cost control

If you can't reach your targets for income, reining in your costs may give you a little extra head room to manage cashflow while you plan your next move.

Visibility on outgoings

Cost control can be a challenge when it’s hard to pinpoint hidden costs or where established ways of doing things cost more money than they should. You may also have been coping with unexpected expenses, as you’ve adapted your business for unplanned circumstances.

Improving business practice - It's more than just keeping an eye on outgoings (though that's important). It's about looking at each aspect of your business and business systems (or the gaps where there should be business systems) to see if poor practice is driving costs up unnecessarily.

It can be useful to break it down

You can look at cost centres such as office supplies or freight. Or you can look at what those costs do for your business. It can help to analyse costs in terms of cost of sale and overheads.

Cost of sale and overheads

Cost of sale (also known as Cost of Goods Sold or COGS) is how much it costs you to make a sale. In a business which sells products, COGS is based on the price paid for the product, plus any costs necessary to put the merchandise into inventory and make it ready for sale, including shipping and handling. You can even break it down to calculate the cost of sale of individual units.

Overheads are general business expenses

They can’t be tracked directly to sales. Overheads are what it costs you to open your doors (whether online or actual) every morning.

What’s your plan?

Talk to the team - Analyse your costs and involve your team, including frontline sales staff.
Negotiate with suppliers - Can you work with your providers to ask for discounts or more favourable payment terms on either cost of sale or overhead expenses?
Reduce unnecessary expenses - Now might be the time to trim every expense that’s not related to your core product or service.
Advertising - It might be false economy to cut back on advertising, as customers are online looking for bargains and price-checking alternatives. Targeted campaigns might work better.
Prioritise - Can you pinpoint the products most likely to bring the fastest or best return and hold back on products that are slower to sell?
Promote or discount - If you have old or slow-moving stock, can you discount it and convert old stock to cash? If you can attract customers now, you may be able to use it to spotlight your other products.

Every dollar you can pull back from your costs can go straight into cashflow. Talk to us if you'd like to review your costs and your systems to keep costs under control. Whether your sales are boom or bust, you want to make sure that your costs aren't holding you back.

< Older Post

Newer Post >

Tax planning helps you do more with your money

8 July 2026

Tax may be boring, but smart use of tax planning is a superb way to help your business do more with your money.

Is your business structure still the right fit?

3 July 2026

Your business structure plays an important role in how your business operates, how profits are taxed, how decisions are made, and how much personal risk you may be exposed to. For many businesses, the structure chosen at the start made sense at the time. But as your business grows or changes, it is worth asking whether that structure still supports where you are now - and where you are heading. The three most common business structures are sole trader, partnership and company. Each has different cost, administration, tax and liability considerations. Operating as a sole trader A sole trader structure is where one person owns and runs the business. The main benefit is simplicity. It is easy to set up, and from a tax perspective, business profits or losses are included in your personal tax return. Being a sole trader also does not prevent you from employing staff if your business grows. However, this structure can carry more personal risk. Sole traders generally have unlimited liability, which means if the business runs into financial or legal trouble, you may be personally liable. This makes the right insurance and risk management especially important. A sole trader structure can also become limiting if you want to bring in other owners, attract investment, or prepare the business for sale. Working within a partnership A partnership is where two or more people go into business together. Partnerships can be a practical way to combine skills, knowledge, resources and capital. They are usually relatively simple to set up and manage, although it is important to have a clear partnership agreement in place. This should document how profits are shared, how decisions are made, and what happens if one partner wants to leave or circumstances change. From a tax perspective, partnership profits are generally not taxed at the partnership level. Instead, each partner includes their share of the profits in their own personal tax return. The main risk is that partnerships do not offer the same legal separation as a company. In many cases, partners may be liable for partnership debts jointly and severally. There are ways to reduce this risk, such as using a limited partnership, but this should be considered carefully with the right professional advice. Operating as a company A company is a separate legal entity from its owners, who are known as shareholders. One of the key advantages of a company structure is limited liability. In many cases, a shareholder’s financial liability is limited to the amount they have invested in the business. A company structure can also be useful if you want to bring in investors, introduce new shareholders, or sell the business in future. However, companies usually come with higher administration and compliance requirements than a sole trader or simple partnership structure. This includes annual accounts, tax returns, Companies Office requirements and other record-keeping obligations. It is also important to remember that company funds belong to the company, not personally to the directors or shareholders. Money is usually taken out through salary, dividends, drawings or director loan accounts, depending on the circumstances. Getting this right is important from both a tax and cashflow perspective. When should you review your structure? It may be worth reviewing your business structure if: your business has grown or become more complex you have taken on staff, debt, assets or higher levels of risk you are considering bringing in another owner or investor you are planning to sell, exit or pass on the business your personal circumstances have changed you are unsure whether your current structure is still tax-effective or appropriate Is your current structure still working for you? There is no one-size-fits-all answer when it comes to business structure. The right option depends on your business, your goals, your risk profile and your future plans. If you are unsure whether your current structure is still the best fit, talk to our team. We can help you understand the pros and cons of each option and work with your legal adviser where needed to make sure your structure supports your business now and into the future.

Getting the balance right with AI: Some dos and don'ts

29 June 2026

We’re experiencing an ‘AI revolution’. But do you know where AI can truly benefit your small business? We cover some key dos and don’ts of using AI in your business.