A Guide on Cash Flow Management for Print Shops

A Guide on Cash Flow Management for Print Shops

Running a print shop is no easy feat, let alone any business. It’s one thing to want to grow your profits to expand your business, but there’s a big difference between being profitable and sustainable. If you don’t manage your funds properly, you may run low on cash to sustain your operations.

It’s why cash flow management should be the top priority. It allows you to prioritize your shop’s cash flows for various purposes: investing in new equipment, paying your suppliers, and more. You always want a positive cash flow: you earn more money than you spend.

What Cash Flow is All About

A scattered pile of one dollar notes

Cash flow is the movement of money, be it cash or non-cash, in and out of your business. Many other financial figures feed into factoring your cash flow, including accounts receivable, inventory, accounts payable, capital expenditures, and more. Any money you receive from sales or other sources is cash inflow, while the funds you use for, for example, payments to vendors or purchasing printing supplies, is a cash outflow. Every business’s priority is ensuring cash inflows exceed cash outflows to have cash on hand for further use.

In the case of a print shop, your cash inflows stem from the sales of your products and services, as well as other sources of income you might have, such as money borrowed or money you use from your savings. On the other hand, your cash outflows come from payments to your suppliers, expenses for supplies, and purchasing or maintaining new equipment. 

There is a difference between positive cash flow and profit. Profits come from whatever remains after you’ve deducted your overall expenses from the total revenue generated. On the other hand, cash flow comes from deducting your expenses from ALL your sources of cash.

Profit = Sales revenue – costs
Cash flow = Cash inflow – Cash outflow

Profit doesn’t tell you everything you need to know about how your print shop is doing financially. It’s one thing to be profitable on paper, but you can still be unable to repay the bills. Similarly, meeting your financial commitments on time doesn’t necessarily mean you’re running at a profit. Profitability doesn’t account for the times you’ve had negative cash flow.

To put it in perspective, your shop can bring in positive cash flow even if it’s running at a loss, and you’ll still be able to manage as long as you can maintain that positive cash flow coming in. For example, you might not be profitable because you’re not making enough sales, but you’ve got positive cash flow because you injected some cash to support operations. On the other hand, if you’re running at a profit but experiencing consistent negative cash flows (e.g., you’ve got plenty of sales, but you’ve just paid lots of money upfront for new equipment), it won’t be long before you go out of business.

Why is Managing Cash Flow So Important?

For many new printers, the ultimate goal is to maximize profits and grow the business to draw in customers. It’s easy to get excited about the prospects of growing your shop. Still, the how of it is usually left unaddressed. If you don’t have a concrete plan to manage your expenses, you’ll run into trouble in time.

Focusing solely on your growing profits might blindside you to your shop’s other financials. After all, profit doesn’t give you the complete picture of where your shop stands. If you focus too much on growth but don’t account for your overall expenses, you may quickly end up in the red.

A pencil and eraser laying beside a lightbulb sketch with a question mark in the middle of the bulb

Look at it this way: cash flow management is all about knowing the movement of cash in and out of your print shop. With this knowledge, you can optimize your operations to draw positive cash flow into your business. As such, the benefits you’ll enjoy from such management strategies include the following:

Alleviating the stresses of managing your print shop’s financial position: Managing the shop’s finances can quickly get stressful when there’s so much you need to remember: the movement of goods to customers, paying your vendors on time – the works. Keeping close track of your finances regularly and organized can take the edge off your management.

Predicting any upcoming shortfalls in advance: With a complete picture of your shop’s financial position, you’ll be able to know when there may be shortfalls and have a plan to overcome them before it happens. You’ll learn to delay taking up a new loan when your cash flow isn’t looking too good for a particular period. 

Helping with budgeting for long-term growth: Having money in the bank is one thing, but using it in a meaningful way is another. By gauging your cash flow, you’ll know how to make full use of your available funds: whether to save it for further growth or to have it on hand for various expenditures.

Building trust with vendors and banks: Having a sound financial plan to back up your shop’s operations and expenses can give you some leverage with banks and suppliers. You’ll be able to show them that you can deliver on the terms of a loan or supply arrangements and not cut them out completely when the going gets tough.

Keeping the business afloat: Good cash flow management ensures that your business always enjoys positive cash flows into your shop’s operations. Knowing the ins and outs of your shop’s expenses and receivables gives you a clearer picture of how things are going and what you can do to improve your financial position.

Keeping Cash Flow Organized

Two people discussing matters using their laptops while referring to notes

The simplest method of organizing your cash flow is to have a spreadsheet to keep track of it. Something as simple as a Google Sheets or Microsoft Excel workbook will suffice for your statements as they are easy to use and keep track of. Picking Google Sheets allows you to update your cash flow statements anytime and anywhere, while an Excel spreadsheet might be preferable for long-term cash flow management and analysis.

You’ll also have the freedom to tailor its records to whatever you require to paint a picture of your financials. You can also determine the frequency of updates to your cash flow statements, whether weekly, monthly, or quarterly.

To stay ahead of your cash flow movements, consider the following helpful tips for when you’re looking at – and updating – your cash flow statements.

  • Make sure to keep track of all sources of revenue and expenditures
  • Use past data to help with making projections for future expenses
  • Take holidays and peak seasons into account, as they can affect your cash flows
  • Update as often as possible to not miss out on any information

The crucial part of cash flow management comes from foresight. With the cash flow statement available, you’re allowing yourself to find new ways to grow your income, minimize needless outflows, and prepare for any unexpected setbacks that could cost you significantly. Even if a lot of the data is based on predictions based on your shop’s overall activities, having a plan is already an essential foundation for ensuring your cash flow remains positive.

How to Improve Your Cash Flow

With all these management strategies in place, you won’t have to worry much about your shop’s finances. But there are still ways you can make it go a lot smoother, and if that helps your bottom line, it’ll be worth your time.

Get Paid on Time

A credit card point-of-sale (POS) terminal with receipts printed out

Setting payment terms and enforcing them can ensure you receive your payments promptly. It might seem obvious, but you may have to deal with particular customers who make payments a big deal. Make it a point that your customers pay upfront – or put in a deposit beforehand – so you can cover the costs for blanks and other necessary supplies. You’ll be able to mitigate the loss of a customer that doesn’t pay or when you need the funding for other orders.

When discussing with your customers, you’ll need to ensure that the payment terms are agreed upon and then honored. You can send out your invoices immediately to ensure you’re paid promptly. All of this is essential to ensuring you have funding for your shop’s use.

Leverage on Opportunities

Sometimes, you must make the most of what you have. Got old stock that needs to be cleared out? Have a flash sale for them. Have garments that are selling very well? Organize a promotion to showcase and sell other similar products. You could also introduce incentives to attract customers to make their payments early. The old saying, “When there’s a will, there’s a way,” makes sense in finding – and leveraging – opportunities to your shop’s advantage.

Lease Equipment

An automated screen printing press at work

The last thing you want to do is saddle your shop with significant debt when buying all the necessary printing equipment. For small print shops, purchasing equipment or inventory with a long-term payoff can be a very daunting decision to make. Instead of buying them outright, leasing equipment would be the more cost-efficient option. You only need to make small payments over time without making a huge dent in your cash flow.

At the end of the lease, you can choose to return the equipment or buy it at a price based on how much you’ve paid over the course of the lease.

Making Forecasts

A man and a woman with a laptop in her right hand discussing business matters using a whiteboard

Forecasting the ins and outs of cash flow isn’t necessarily a science, but it’s not easy to pick up on. Strong cash flow management requires that you see the bigger picture and not only include predicting shortfalls ahead of time. Granted, you aren’t going to make highly accurate projections all the time, but what you can learn and then apply to your print shop will undoubtedly help you to tailor your print shop to meet any upcoming challenges you’ll need to handle.

Budgets can be helpful but only account for plans to grow the shop or increase sales; they don’t provide critical projections for the shop’s overall financial status. Cash flow, however, allows you to do just that, which is a powerful tool you should use. Consider using Quickbooks to help organize your cash flow statements, as it has a handy integrated cash flow prediction tool. 

Consider Outsourcing

Not planning to have any physical equipment in your shop? Outsourcing is an option available to help keep your costs low. For one, you won’t need to purchase printing equipment, reducing your operating overheads and removing the need to buy printing supplies. You also won’t need to spend a significant amount on rental payments since you don’t need the space to fit all the required printing and supporting equipment.

Instead, you’ll be delegating the task of printing garments to a contract printer while focusing on sales, marketing, and growth. Contract printers pride themselves on fast turnaround times and excellent print quality while offering competitive service pricing. You could also consider working with a print-on-demand provider, which provides printing services and shipping directly to customers, so you won’t need a warehouse to store inventory.

Watch Your Expenses

A person using their smartphone calculator

There are many ways you can effectively reduce your expenses without needing to sacrifice your print quality or turnaround times.

  • Use compatible inks, which are affordable and just as good as the original equipment manufacturer’s (OEM) inks.
  • Make inventory purchases only when necessary. Don’t keep extra inventory; only order blanks after customers have paid their deposit.
  • Find out if vendors offer early payment incentives, such as discounts, which you can leverage.
  • Pay large amounts on installment payments to reduce the installment period, mainly for long-term loans at higher interest rates.

This is not an exhaustive list; much like opportunities for sales and marketing, any chance you get that helps keep costs down can pay off in the long run.

Use YoPrint for Handling Payments (and More)

Our print shop management software offers valuable tools to help you manage your inventory, production, sales, and customer service. For one, you’ll have a customer portal that easily accepts payments from your customers. They can view the payment details for their order(s), make payments through various means, and have it all done efficiently. You won’t need to bother them about their card information, nor do they need to send multiple emails to ask about every single order they’ve put with you.

You can also download reports from the app to know how much revenue you’ve generated, allowing you to calculate your cash flow. Moreover, you can also sync it with your Quickbooks account, allowing you to use the latter for effective cash flow management.


A "Yes, We're Open" sign hanging on a glass door

In a nutshell, cash flow management helps a business like yours effectively manage its funds for short-term commitments and long-term planning. Balancing your overall costs while staying in business hinges on how well you can handle your cash coming in and going out. Remember that you always want to maximize positive cash flow for your business and that profitability doesn’t tell the whole story; you may still be running at a loss despite increasing profits.

Effective cash flow management requires consistency in keeping track of cash flow changes as time goes by. How often should you update your cash flow statement? Can you maximize sales while keeping costs low? Can you predict when there may be shortfalls? Do you have the funds to cover these shortfalls and have extra for unexpected complications? These are just a few questions you’ll need to consider when deciding where to divert your cash for your print shop, be it for sales, marketing, or growth (or even all of them simultaneously).

Once you’ve mastered the intricacies of cash flow management, your print shop will surely see far better sales results and growth over time.