With more than 90 percent experiencing cash flow challenges, and over 80 percent of closures tied to cash flow management, monitoring KPIs is key to survival.
Leading invoice factoring company Charter Capital reports that small businesses across the nation are struggling with cash flow challenges, a problem that often leads to poor business outcomes or closures, but finds that those that track and act on core key performance indicators (KPIs) are more likely to maintain resilience and strength. Additional insights are shared in “11 Cash Flow KPIs Every Small Business Should Track,” now available at CharCap.com.
The ability to identify cash flow gaps before they occur is a major strategic advantage for small businesses.”
— Joel Rosenthal, Co-founder and Executive Manager at Charter Capital
CASH FLOW KPIS CRITICAL BUT UNDERUTILIZED
Small businesses continue to face widespread cash flow instability, yet many lack the systems or visibility needed to recognize issues before they become damaging.
> Cash Flow Challenges Are Common: Nearly 90 percent of small businesses struggle with cash flow challenges.
> Data is Underutilized: Two-thirds fail to track and/or leverage cash flow metrics to support business financial health.
> Issues Are Tied to Business Closure: Over 80 percent of small business failures are tied to cash flow management.
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“Business owners often assume their cash flow is in good shape as long as sales look steady,” explains Joel Rosenthal, Co-founder and Executive Manager at Charter Capital. “In reality, cash flow can tighten even during strong sales periods, which is why tracking a few key indicators makes such a difference.”
SMALL BUSINESSES GAIN GROUND WHEN CASH FLOW KPIS ARE LEVERAGED
Rosenthal says that businesses that track cash flow KPIs consistently are more likely to operate with greater stability and are better positioned to respond when conditions change.
> Visibility into Liquidity: Clear cash-flow KPIs give a more accurate view of available cash, helping business owners understand how prepared they are to meet upcoming expenses.
> Stronger Decision Making: Consistent tracking provides a factual basis for operational and financial choices, making it easier to plan purchases, allocate resources, and evaluate opportunities.
> Improved Payment and Collection Practices: Cash-flow metrics highlight the timing of inflows and outflows, allowing business owners to adjust payment schedules and strengthen collection routines.
> Early Identification of Shortfalls: Key indicators reveal shifts in cash position before they escalate, giving businesses time to correct course or secure working capital.
“The ability to identify cash flow gaps before they occur is a major strategic advantage for small businesses,” Rosenthal adds. “It provides breathing room to make financially sound decisions, like tapping into invoice factoring rather than taking on a high-interest loan.”
He notes that factoring involves getting funded on a B2B invoice for a slight fee rather than borrowing, thereby aligning cash flow and expenses. Because it accelerates payment and is not a loan, it functions more like debt-free funding. Businesses can use it once or on a recurring basis, and approval is fast, with some factoring companies like Charter Capital offering same-day approvals and funding on the day an invoice is submitted.
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