Managing cash flow can be a bit tricky in the early stages of starting a business, as you can't really predict – with accuracy – how many customers you're going to have or sales you're going to make.

This simple exercise from business mentor Carole Watson will help you prepare for the times your business will be short of cash or know when you'll have extra to save, spend or invest.

To learn how to control cash flow in your business, start by monitoring your personal finances on a weekly basis for at least a month. If you're not accustomed to doing this, you might find the results quite shocking!

In spreadsheet software, like Excel, create a worksheet like this:

This exercise will help you identify any weeks in which there might be a shortfall, or even a surplus that you can use to save, invest or spend on the latest must-have product.

Creating cash-flow projections for your business is no different, really. Swap weekly columns for monthly columns.

If there's a projected shortfall in any month, you might want to create a new sheet for that month and monitor the inflow and outflow of money on a weekly basis. Alternatively, you might want to consider rescheduling some of your payments, particularly if the shortfall is caused by seasonal fluctuations in your business.

There are other refinements you can add to your business projections. I like to calculate the "average customer spend", then add a little button that lets me see income figures based on a) average customer spend multiplied by b) a projected number of customers.

You can also add percentage buttons that will increase or decrease figures by 10%, 15% or 20% etc., to help you monitor how financial performance would be affected by fluctuations either way.

Enterprise Nation has helped thousands of people start and grow their businesses. Led by founder, Emma Jones CBE, Enterprise Nation connects you to the resources and expertise to help you succeed.

How to create a simple cash-flow projection for your business

A simple exercise to help you prepare for times your business is short of cash.

, founder of Counting Clouds, joins Lunch and Learn to talk about the benefits of cloud accounting in business.

You may have heard a lot about accounting software. In this webinar, Caroline explains what cloud accounting is and what advantages it can have for small businesses. Caroline also offers tips for how you can move to a cloud-based accounting solution.

I work with purpose-led businesses to help them look beyond profit and consider the planet and people in all their decisions.
I am a portfolio finance director and B Leader and I work with businesses to improve their social and environmental impact.
Having gone through the B Corp Certification for my company, I went on to train as a B Leader so I can support companies through their B Corp journey and beyond!
I want to build a better world for our children and I am very passionate about sustainability and firmly believe we can all make a difference.

B Leader and Portfolio Finance Director

Lunch and Learn: The benefits of cloud accounting

Learn what cloud accounting is and how it can help your small business.

Why do many start-ups fail? It's well known that cash-flow problems can become so serious that many businesses don't survive them. What if you can use the tax system to help you?

If you know where to look, there's quite a lot out there. 

, director of On The Spot Tax and an Enterprise Nation adviser, explains how to find it.

 and paid PAYE (Pay As You Earn) in the previous three years, or even still paying PAYE income tax, your start-up tax loss will generate a tax refund.

This provides you with some valuable cash flow in the first four years of your sole trade. For example, if you make a £10,000 tax loss in the tax year to 5 April 2019 and paid 40% PAYE income tax in the tax year to the previous 5 April, you can claim a £4,000 tax refund in your tax return.

You can increase your tax loss by including a proportion of your home office costs as an expense. This will increase your PAYE income tax refund.

A tax loss might unexpectedly arise if you invest in a lot of equipment for your business. Up to £200,000 of equipment expenditure is tax deductible in the year you incur it. That will either increase your tax loss or even turn a trading profit into a tax loss.

 can be helpful. VAT is paid during the year on account based on estimated figures.

If you are enjoying an increasing turnover, the amounts paid on account will be less than the final calculated VAT and the balancing amount due is paid one month later than usual. These delays in paying the VAT due is a useful cash-flow advantage.

As long as it doesn't bring forward your normal payment terms, ask your suppliers to invoice you just one day earlier and you can improve your VAT cash flow by three months.

For example, a £10,000 invoice due to be invoiced on 1 April could be invoiced on 31 March, allowing you to offset the £2,000 VAT in the quarter to 31 March rather than the quarter to 30 June.

Similarly, delaying issuing your own invoices by one day has the same effect. Together, this could provide you with interest-free working capital of £4,000 for three months without involving your bank.

Attract external investors by using the Enterprise Investment Schemes

There are plenty of investors with cash looking for a good return from promising start-ups. The investors get to save 50% or 30% income tax, and are unlikely to pay tax on the gains they make.

As a result, limited company start-ups should make sure they're eligible for one of the Enterprise Investment Schemes (

) to attract as many investors as possible.

Claim a research and development cash payment

If you're a loss-making limited company carrying out research and development (R&D), HMRC will pay you cash even if you've not yet paid them anything.

If you're writing specialist software, developing infrastructure or rebuilding a website, this activity may be eligible for an 

It might seem a bit extreme, but it might be a suitable option for some.

If you rent out a room in your home – owned or rented – up to £7,500 is tax-free and so it's all available to you to help fund your start-up.

Finance Hub - Access personalised finance options

Personalised finance options for start-ups, small businesses, sole traders, freelancers and other business professionals. Take the 

and get recommendations tailored to your financial needs.

We&apos;re here to help you.
Accessible, jargon-free explanations to help you understand your finances, optimise your tax claims and grow your business successfully.
Benefit from:
<ol>
<li>Practical, relevant, commercial corporation tax, income tax, director remuneration tax and VAT advice.</li>
<li>Understanding your figures. What do they tell you? We&apos;ll take you through it.</li>
<li>R&amp;D and S/EIS advice and claims.</li>
<li>Signposting you to other relevant services, such as accounting software and bookkeepers, if required.</li>
</ol>

CEO and Founder

How to fund your start-up with the tax system

Cash-flow issues can become so serious that many businesses don't survive them. What if you use the tax system to help you?