CPAs and Cash Flow: Avoid Errors While Scaling

Published by BradyRenner CPAs | March 21, 2023

As we close out our series on the ins and outs of scaling your small business, it’s important to talk about an ongoing financial necessity for any organization: cash flow management! Maintaining a solid understanding of your finances helps your team evolve with market trends and customer preferences, cover new and old investments, and pursue growth opportunities intelligently.

Unfortunately, small business owners and CEOs who experience the joy and excitement of scaling their organization quickly also often encounter obstacles when balancing their payables and receivables. While cash flow problems tend to pop up throughout the scaling process, there are surefire preventative measures you can use to avoid them.

Read on to learn some of the best resources you can use to bypass cash flow errors while scaling.

Scaling & Cash Flow Problems: What’s the Holdup? 

Depending on your current cash flow environment, this metric can take some significant dips throughout the scaling process. There are several good explanations for why this is the case:

  • Going in Empty: One of the easiest mistakes to make as a small business owner looking to scale is underestimating just how much those organization-wide changes will cost! CEOs should be prepared to invest smartly, but also to potentially invest heavily in growing their physical and social operations.
  • Hiring to Grow: Rising labor costs are often the biggest draw from a small business’s accounts as they scale. While growing your team is an investment in the future of the company, the benefits of these hires are often not seen until a little later on, leading to cash flow uncertainty in the present.
  • Evolving Expectations: It’s no secret that major changes require major contributions from leadership — and with a CEO’s time and energy depleted, there are fewer chances to focus solely on maintaining cash flow balance.
  • Impactful Decisions: Whereas a slow-growing business may not be as pressed if one payable goes past due, this could signal significant problems during a fast-paced scaling process. Risk and uncertainty are hallmarks of ambitious growth, and a hasty decision that costs revenue could easily lead to steep cash flow repercussions in a matter of weeks or even days.

Getting Ahead With a Full Financial Review 

Because there are many moving parts throughout the scaling process — more so than at any other time in a small business’s lifespan — the odds of a cash flow mishap of some kind tend to also be higher. Luckily, the potential repercussions of a slipup are largely avoidable.

The best way to ensure a high enough level of revenue for your various payments to be submitted on time is to conduct a full-fledged review of your company’s spending each quarter, with a detailed annual review to top off the year and prepare for tax season. This evaluation process ensures you remain conscious of your finances and increases your level of comfort with putting a firm stop to anything getting in the way of a balanced cash flow environment — whether that be an unnecessary monthly charge, a planned equipment upgrade that should be postponed, or a limit on spending in any other capacity.

How a CPA Helps You Manage Your Evolving Cash Flow

In theory, a CEO and their team could conduct the financial review process on their own. But as any leader spearheading small business operations knows, there often remains little time to devote to any one task with one hundred percent focus and clarity, let alone the large job of evaluating every single account charge and expense the business has accumulated over weeks of operation.

Enter the CPA — the perfect financial partner to keep you in the clear on your cash flow management as you scale. CFP-certified accounting professionals have years of experience behind them managing the accounts of small businesses like yours, and can provide a brand new perspective on your payables and receivables that is unfettered by worries about other aspects of your organization.

After completing an initial accounting assessment, the exemplary CPAs at BradyRenner sit down in person or over video with business owners to achieve this financial review process. The review itself is made simpler by an ongoing, tailored set of financial services and strategies across four vital areas (accounting, bookkeeping, consulting, and tax planning). The result is top-to-bottom financial clarity for your entire organization — so you can avoid cash flow errors with preemptive action, and move with confidence when it comes time to assess your cash flow strategy.

BradyRenner: Financial Growth You Can Count On 

Since 2014, BradyRenner CPAs has been in the business of making your account management strategy as clear and concise as possible. With decades of collective experience in accounting and finance, our team is the perfect solution for small businesses in the Baltimore-Washington region — whether you’re just starting out or scaling up for the first time.

We hope this blog series has given your team a better understanding of how CPAs and scaling businesses go hand-in-hand. Check out our previous installments to learn more, and leave BradyRenner a message on our site or give us a call to let us know how we can best support your growth in this exciting time!