# 7 Cash Flow Mistakes That Kill Small Businesses (And How to Fix Them Fast)

 Written By: Fraser Barrett CPA

Cash flow is the oxygen of any small business. In British Columbia, where operating costs are high and seasonal swings hit hard—think Whistler ski shops in summer or Squamish bike shops in winter—one slow month can spell disaster. 

The Canada Revenue Agency (CRA) doesn’t pause tax payments because your clients paid late. BC Hydro still wants its bill. And if you’re in the Sea to Sky corridor, a single delayed can throw your entire payroll into chaos.

Mistake # 1: Treating Revenue Like Cash

What happens: You book $50,000 in sales in December, celebrate, then realize only $12,000 hit your bank account by January 31.

BC reality: Contractors, trades & professional services firms often invoice after the busy season. Net-30 terms feel generous—until you’re waiting 45–60 days for payment.

Fix it fast:

1. Switch high-value clients to progress billing (e.g., 50% upfront for custom projects). 

2. Offer a 2% discount for payment within 10 days. 

3. Use smart credit card platforms (like Benji pay) to automate credit card collection and rebilling of credit card fees.

Mistake # 2: Ignoring Seasonal Cash Crunches

What happens: A Squamish bike store banks $400K from June–September, then burns through reserves from November – March.

Fix it fast: 

1. Build a 13-week cash flow forecast in Excel or a smart cash flow forecast tool

2. Set aside 20% of peak-season revenue into a separate “winter bridge” account. 

3. Ensure you have liquidity on hand for slow seasons.

4. Having your bookkeeping constantly up to date allows you to have more accurate forecasts.

Mistake # 3: Mixing Business and Personal Expenses

What happens: You pay for groceries with the business debit card “just this once.” Come tax time, your books are a mess, and forecasting becomes much harder.

Fix it fast: 

1. Open a separate business checking account and credit card 

2. Use Float for virtual cards tied for easy tracking.   

3. Run a monthly “owner’s draw” instead of random withdrawals—keeps CRA happy.

Link:

Mistake # 4: Overlooking GST/HST Input Tax Credits

What happens: You pay GST on a new point-of-sale system but forget to claim the $1,200 ITC. That’s cash left on the table.

BC reality: BC’s 7% PST + 5% GST = 12% on most purchases. Missing ITCs hurts, Aspect Accounting can help manage these crucial ITC’s.

Fix it fast: 

1. Tag every expense in QuickBooks with the correct GST/HST code. 

2. Run the CRA ITC report monthly and review periodically.

3. File quarterly if you’re consistently in a refund position.

Mistake # 5: Letting Accounts Receivable Age

What happens: A $15,000 invoice sits at 75 days. You finally call the client—they “forgot.” Now you’re covering payroll with a credit line at 11% interest.

BC reality: Construction and trades are notorious for slow pay (net-30/60 days is common).

Fix it fast: 

1. Automate 3-stage reminders (Day 15, 30, 45) via you accounting system. 

2. Charge 2% interest after 30 days—it’s legal in BC and gets attention. 

3. Use Plooto or quickbooks to send invoices with one-click payment links (80% faster collection).

Mistake # 6: Not Managing Accounts Payable

You pay suppliers early to “stay in good standing,” but that drains cash you could use for payroll or inventory.

BC reality: With payroll, WCB & general expenses needed to be paid; small businesses in Squamish or Whistler often juggle tight payment windows. Pay too soon, and you’re short for CRA remittances; pay too late, and suppliers cut you off mid-season.

Fix it fast:

1. Negotiate net-45 terms with key vendors (most will agree if you’ve paid on time for 6 months).

2. Use Plooto to schedule payments for the exact due date—no earlier.

3. Set a weekly AP aging review in QuickBooks; flag anything over 30 days. One Aspect Accounting client saved $15,000 last year by stretching terms without penalties.

Link:

Mistake # 7: No Line of Credit Buffer

What happens: You have the pay a big tax bill and you need to ramp up inventory purchases for the coming season. You scramble, max out personal cards, and pay 11% interest.

Fix it fast: 

1. Apply for a $25K–$50K operating line at your bank while cash flow is strong. 

2. Use it only for 30-day gaps, not ongoing expenses. 

3. Pair with Aspect Accounting’s cash flow dashboard

Still need more help?

Book a free consultation with Aspect Accounting. We’ll review your last 3 months of bank statements and spot leaks in minutes.

Link:

Aspect Accounting – Bookkeeping that grows with your BC business. 

Proudly serving Whistler, Squamish, Pemberton, Vancouver and beyond.