19th-Dec-2025 • Sheldon Cooper • SME Cash Flow Management
For small and medium enterprises (SMEs) in Kenya, maintaining a healthy cash flow is essential to long-term success. Cash flow management allows businesses to meet their financial obligations, invest in growth opportunities, and weather economic downturns.
A study by the World Bank shows that poor cash flow management is one of the main reasons for business failure in Kenya. By implementing smart strategies, SME owners can ensure a steady cash flow and set their businesses up for success.
Cash flow refers to the movement of money into and out of your business over a specific period. Positive cash flow means more money is coming in than going out, while negative cash flow indicates the opposite.
First, list all sources of revenue for your business, such as product sales, service fees, and government grants. Then, categorize expenses into fixed (rent, salaries) and variable (utility bills, marketing costs). Knowing these figures helps you forecast cash inflow and outflow.
Late payments can cause cash flow problems. Implement a strict invoicing policy and send reminders when payments are overdue to speed up the process.
Proper inventory management can help you avoid stockouts and excess inventory, both of which impact cash flow negatively. Monitor your inventory levels closely and adjust orders based on sales data.
A cash flow forecast helps you predict the financial health of your business in the future. Use this tool to identify potential cash shortages and make adjustments accordingly.
Lipabiz's business management platform and payments platform can help streamline your operations, enabling you to better manage your cash flow. By automating tasks like invoicing, accounting, and payment processing, Lipabiz empowers SME owners to focus on growing their businesses.