Cash Flow Management for Small Businesses: Insights from Wafeq Webinar



Managing cash flow effectively is essential for small businesses to maintain financial stability and ensure long-term success. In this webinar hosted by Wafeq, industry experts shared valuable insights into the importance of cash flow, common challenges faced by SMEs, and strategies to improve liquidity. Below, we will explore the main questions and their answers from Lena.

Guest Bio

Lena Barwick is the Founder and CEO of Bespoke Accounting, a firm specializing in supporting small businesses in the UAE with their financial needs. Lena began her career in 2007 with KPMG in Moscow, gaining extensive experience in finance. After relocating to the UAE in 2013, she worked as a Finance Manager in multiple UAE-based companies before transitioning into freelance accounting and tax consultancy.

Watch the complete webinar record on our YouTube channel:

Main Topics Covered in the Webinar

Topic 1: Understanding Cash Flow and Its Importance for SMEs

Q1: What is cash flow, and why is it critical for small businesses?

A: Cash flow refers to the movement of money in and out of a business.

Cash inflows: Money coming into the business (e.g., from sales).

Cash outflows: Payments for goods, services, or financial obligations.

It is critical for small businesses because it ensures they can meet their financial obligations, such as paying suppliers, employees, and rent, and maintain liquidity for day-to-day operations.

Q2: What is the key difference between cash flow and profit?

A: Cash flow is the actual money available in the bank, while profit is the surplus after deducting expenses from revenue. A business can be profitable on paper but still face cash flow issues if customers delay payments or if there are high fixed costs. Profit does not always equate to having cash on hand.

Q3: How can poor cash flow management threaten business sustainability?

A: Poor cash flow management can lead to:

• Inability to pay suppliers, vendors, or employees on time.
• Loss of trust from suppliers and vendors.
• Low employee morale due to delayed salaries.
• Difficulty in meeting rent or other fixed obligations.

Ultimately, it can make the business unsustainable if financial obligations cannot be met.

Topic 2: Common Cash Flow Challenges Faced by Small Businesses

Q4: How do late payments from customers impact liquidity?

A: Late payments from customers can severely impact liquidity by delaying cash inflows. This can lead to:

• Inability to cover operational expenses.
• Delayed payments to suppliers or employees.
• Loss of trust from suppliers.

Businesses should proactively manage accounts receivable to minimize delays.

Q5: How do high fixed costs and operational expenses affect cash flow?

A: High fixed costs (e.g., rent, salaries) remain constant regardless of revenue fluctuations. During periods of low revenue (e.g., summer months), these fixed costs can strain cash flow.

Q6: How does seasonality affect the cash flow cycle?

A: Seasonality can cause fluctuations in cash flow.

Revenue may increase during Ramadan or Christmas but decrease during summer when families leave the UAE.

Businesses must plan ahead for these fluctuations by adjusting expenses or building cash reserves to cover periods of low revenue.

Q7: How can corporate tax be a challenge for cash flow management?

A: Corporate tax introduces new financial obligations that businesses must plan for. For example:

Businesses need to set aside funds for tax payments.

Understanding provisions like small business relief (for revenues under AED 3 million) or tax losses is crucial to avoid unexpected cash flow issues.

Read more: Cash Flow Management Strategies: How to Achieve Financial Stability for Your Business.

Topic 3: Proven Tips and Strategies to Maintain Liquidity

Q8: How can businesses create a cash flow forecast, and why is it essential?

A: A cash flow forecast helps predict future cash inflows and outflows. To create one:

1. Start with sales targets for the year, broken down by quarters and months.
2. Link sales to the cost of goods sold (if applicable) and operational expenses.
3. Include fixed costs (e.g., rent, salaries) and variable costs (e.g., bonuses, gratuity).
4. Account for VAT payments and other financial obligations.
5. Use accounting software (e.g., Wafeq) to automate and streamline the process.

👉 Why it’s essential: Ensures the business has enough liquidity to meet its obligations and prevents unexpected financial crises.

Q9: How can businesses manage accounts receivable and payable efficiently?

✅ Accounts Receivable: Collect payments as quickly as possible by:

• Including clear payment terms in agreements.
• Sending invoices immediately after delivering goods or services.
• Adding bank details to invoices and ensuring customers add your account as a beneficiary.

✅ Accounts Payable: Delay payments strategically while maintaining good relationships with suppliers.

Q10: Why is building a cash reserve important, and how can businesses do it?

A: A cash reserve helps businesses handle unforeseen expenses or revenue fluctuations.

👉 How to build one:

• Set aside funds for VAT payments (5% of sales).
• Save for employee gratuity by calculating the expected amount and dividing it into monthly contributions.
• Plan for annual expenses like trade license renewals by saving a portion each month.
• Use a separate savings account to automate and track reserves.

Q11: How can businesses leverage technology to improve cash flow management?

• Use accounting software (e.g., Wafeq) to automate invoicing, track expenses, and generate cash flow reports.
• Integrate bank feeds to monitor transactions in real time.
• Use tools like Pemo for prepaid cards to control spending and automate expense tracking.
• Utilize analytics tools (e.g., Sift Analytics, Spotlight) to create dashboards and gain deeper insights into financial data.

Topic 4: Tools and Best Practices for Cash Flow Management

Q12: What tools are available for cash flow management?

A: Several financial tools can help businesses manage and monitor cash flow effectively:

Accounting Software

• Wafeq: Helps automate invoicing, track expenses, and generate financial reports in real time.
• Other Software: Cloud-based solutions allow multiple users to access financial data and maintain up-to-date books.

Prepaid Card Services

Pemo: A UAE-based company providing prepaid cards with spending limits. Businesses can:

• Issue virtual and physical cards to team members.
• Control spending limits per transaction.
• Automate receipt uploads and integration with accounting software.

Financial Analytics Tools

Sift Analytics & Spotlight Reporting:

• Pull financial data from accounting software.
• Create visual dashboards, graphs, and detailed reports.
• Help businesses make informed financial decisions.

Bank Integrations for Payment Processing

Wafeq integrates directly with UAE banks like Emirates NBD and HSBC.

Enables direct bill payments without switching platforms.

Q13: What are the best practices for improving cash flow visibility and making informed financial decisions?

A: To improve cash flow monitoring, businesses should:

✅ Conduct regular cash flow reviews

Compare actual results against budgets and previous periods.

Identify any discrepancies or unusual trends.

✅ Monitor software subscriptions

Regularly review unnecessary SaaS subscriptions that may be draining cash flow.

Example: Some businesses unknowingly keep LinkedIn job postings or paid ads running, leading to unexpected costs.

✅ Automate reporting and tracking

• Utilize accounting software dashboards for real-time cash flow tracking.
• Implement alerts and notifications for due invoices and pending payments.

✅ Prioritize expense control

• Keep a close eye on variable expenses, especially during economic downturns.
• Evaluate return on investment (ROI) before committing to new expenses.

✅ Leverage technology for forecasting

• Use cash flow projections to predict upcoming financial obligations.
• Set aside reserves for VAT, corporate tax, and large expenses like rent renewals.

Topic 5: Preparing for Future Financial Challenges

Q14: How can businesses anticipate changes in market conditions and their impact on cash flow?

A: Businesses must stay informed and adaptable by:

1- Staying updated on tax and economic regulations

• Corporate tax laws, VAT updates, and banking policies impact cash flow.
• Attending webinars like Wafeq’s or subscribing to financial newsletters helps businesses remain compliant.

2- Conducting market and SWOT analysis

• Regularly assess external factors affecting cash flow.
• Plan for seasonal fluctuations (e.g., reduced revenue in summer months).

3- Diversifying revenue streams

• Businesses relying on a single income source are at higher risk during downturns.
• Explore new service offerings or alternative business models to maintain stability.

Read more: Strategic Planning in Business: Your Comprehensive Guide to Success.

Q15: How can businesses adapt financial strategies to remain resilient during economic downturns?

To survive economic downturns, businesses should:

✅ Prioritize essential spending

Only allocate budgets to activities with measurable ROI.

Example: Investing in digital marketing tools that directly contribute to lead generation.

✅ Delay non-critical investments

Consider postponing office expansions, rebranding, or costly tech upgrades during uncertain times.

✅ Maintain open communication with suppliers and customers

Renegotiate payment terms with vendors to extend deadlines.

Offer flexible payment options to customers to encourage faster settlements.

✅ Establish cash reserves

Prepare for unpredictable financial challenges by maintaining 3-6 months’ worth of operational expenses in a savings account.

Q16: How can developing financial management skills ensure long-term success?

Businesses should invest in upskilling their finance teams:

• Encourage team members to attend training sessions
• Internal financial education improves strategic decision-making.
• Example: Wafeq hosts free training webinars on accounting best practices.

Hire or outsource financial expertise

• Consider hiring a fractional CFO for strategic cash flow planning.
• Engage tax consultants to ensure compliance with UAE corporate tax laws.

Support employees with professional certifications

• Programs like ACCA, CMA, and corporate tax diplomas help finance teams stay ahead of regulatory requirements.

Companies like Bespoke Accounting actively sponsor employees to obtain ACCA certification.

Q&A Session from Attendees

Q17: Will corporate tax affect the future cash flow for SMEs?

However, businesses must still file tax returns and prepare financial statements, which could impact cash flow.

Q18: Should VAT be separated from sales revenue in the real estate industry?

A: Yes.

VAT should be recorded separately to ensure enough cash is available for tax payments.

Best practice: Transfer 5% of sales revenue into a VAT reserve account to avoid cash flow shortages during filing.

Q19: How can new businesses prepare cash flow forecasts without historical data?

1. Estimate expected revenue based on market research.
2. List fixed and variable expenses.
3. Break down annual targets into quarters and months.
4. Use financial templates or accounting software (e.g., Wafeq) to structure the forecast.

Q20: Can cash flow forecasts be created in Wafeq and compared with actual results?

A: Yes! Wafeq allows users to:

✅ Set up budgets and cash flow forecasts.

✅ Compare actual financial performance against forecasts monthly.

✅ Generate automated financial reports.

Q21: What UAE banks can integrate with Wafeq for auto-feed and payment processing?

• Emirates NBD
• HSBC
• Other local banks (confirmation available through Wafeq’s support team).

Q22: What are the best strategies for ensuring cash is available for VAT liabilities?

✅ Automatically transfer 5% of revenue into a separate VAT savings account.

✅ Use accounting software to track VAT liability and set reminders.

✅ Ensure VAT payments are made before the 28th of each filing month to avoid penalties.

Q23: How can businesses improve communication with suppliers and customers to manage cash flow?

• Set clear payment terms in contracts.
• Regularly follow up on outstanding invoices.
• Build relationships with suppliers to negotiate flexible payment terms.

Q24: What are the best tools to control business expenses?

• ✅ Pemo Prepaid Cards – Set spending limits for employees.
• ✅ Wafeq Accounting Software – Automates financial tracking and reporting.
• ✅ Sift Analytics – Creates cash flow dashboards for in-depth analysis.

Effective cash flow management is a crucial component of business success. By understanding key financial principles, anticipating challenges, and leveraging technology, businesses can maintain liquidity, optimize financial processes, and build resilience in uncertain economic conditions. Wafeq’s tools and insights provide SMEs with the necessary support to navigate cash flow complexities and ensure long-term stability.

For further assistance, explore Wafeq’s accounting solutions, attend our weekly webinars, or reach out to our support team for personalized guidance.