The complete guide to cashflow management for Dutch businesses

There’s a lot of uncertainty in business. Will you survive the first five years? Can you grow and retain a customer base? Can you maintain a steady cash flow?

That last question leaves a particularly bitter taste. We all know that cash flow is the lifeblood of any business, but unfortunately, it’s not always in your immediate control. All it takes is one late customer payment or an unexpected bill, and you can find yourself scrambling to make ends meet and keep business operations flowing seamlessly.

40% of Dutch businesses struggle with managing late or unpaid invoices, so if that’s a stat that’s all too familiar, then this blog is for you. We’re sharing actionable cash flow management strategies to streamline your financial operations once and for all.

What is cash flow management?

Cashflow is the money coming in and out of your business, and, ideally, you want more money coming into your business than you have coming out of it. Cashflow management is the process of managing it and ensuring it remains healthy. But, unfortunately, cash flow is the biggest obstacle to business growth, with 22% of SMEs saying cash flow remains their most significant challenge. So, maybe it’s time to do something about it?

The importance of good cash flow management

Aside from the obvious, there are so many benefits to good cash flow management. Without it, your Dutch business will simply cease to exist. You need it to pay wages, invest in stock, dabble in marketing, pay rent and more. 

With good cashflow management, you can…

• Take advantage of growth opportunities. With properly controlled cash flow, you’re free to explore new markets or invest in new product lines without worrying about the impact on limited cash reserves (liquid assets).

• Improve credibility with investors, lenders and suppliers. Being able to meet short-term liabilities (i.e. accounts payable and utility bills), you’re less of a risk to investors or lenders, and being able to pay your suppliers on time every time helps you build a stronger relationship, perhaps securing you better discounts with future purchases.

• Enable better decision making with fund visibility. To maintain good cashflow, you need visibility into company spend — knowing where, why and who is spending funds puts you in a powerful position to make proactive spending decisions.

• Build financial resilience. Let’s say you experience seasonal downturns; good cash flow management will help you weather the uncertain periods with relative financial ease.

• Avoid insolvency. Over 4,000 Dutch businesses succumbed to insolvency in 2024, which is a 30% increase on the previous year. But the good news is that robust cashflow management strategies can help you avoid this same fate.

Types of cash flow every Dutch business should know

There are three types of cashflow: operating, investing and financing. Each impacts business decisions differently:

1. Operation cashflow is cash generated by business operations, e.g. sales, and business expenses like paying bills, rent, wages, etc. Without it you can’t pay suppliers on time, disrupting the supply of goods and you can’t pay staff on time, damaging your relationships and reputation.

2. Investing cashflow is the incoming and outgoing cash from assets or investments. If you buy or sell an asset, for example, perhaps a commercial property or piece of equipment. Negative investing cash flow can spell financial trouble for investors and other stakeholders. It shows them how much cash you’re spending on acquiring or selling long-term assets.

3. Financing cashflow is money coming in and out of the business from loans or other financing like dividends, shares, etc., so if you apply for a loan or make loan repayments, you would class that as financing cashflow. If you’re spending out more on finance activities than you’re bringing into the business this can indicate financial distress. But, if paying off considerable debts is part of your long-term strategy, then it’s not always a signal that finances are unhealthy.

Common cashflow challenges for Dutch businesses

All businesses have to navigate cash flow challenges. Here are four of the most common:

Delays in customer payments

Many businesses struggle with delayed customer payments. Delays in payment mean you can't accurately predict cash flow, making it difficult to manage your finances. And unpredictability is the exact opposite of what your business needs to survive and thrive.

Unexpected bills

Unexpected bills can quickly deplete any working capital you have. The only way to combat unexpected payments is to have a decent amount of cash reserves. But to do that, you need more money coming into the business than is leaving. 

Limited access to finance

Dutch SMEs experience one of the largest banking-financing gaps in Europe, with fewer bank loans available compared to other EU countries. Research suggests this is because many Dutch SMEs have little requirement for external funds. But that can make it more difficult for SMEs who do actually need access to finance. 

Digital transformation gaps

If you manage finances manually, your processes quickly become slow and inefficient, which means you can't optimise your cash flow or manage payments effectively. The lack of visibility and control in your organisation hampers your ability to make impactful and accurate business decisions about things like resource allocation. 

How to accurately forecast your business cashflow

To maintain financial health (and make accurate business decisions), you need to forecast your cashflow. Knowledge is power, so let’s get you that knowledge: 

1. Clearly define your forecasting period. For example, do you want to plan monthly cash flow, quarterly, annually etc.? How far ahead you can forecast might depend on how predictable your income and expenses are. If you’re not sure what to expect over the coming months, you can analyse past cash flow patterns to give you an indication.

2. Next, collect data on all your cash inflows and every anticipated outgoing. So that’s sales, loans, other income and other investments, i.e. angel investments and outgoings, including business expenses, loan repayments, wages and rent.

3. Calculate your net cashflow. Subtract your total outgoings from your total income to calculate your net cashflow.

4. Choose either a direct or an indirect forecasting method. Direct is short-term,and  this is calculated based on your cash transactions. Whereas an indirect method is long-term forecasting, you use your income statements and balance sheets to strategically plan.

5. Calculate cash flow regularly. Knowing how much money is left in your business for each period, i.e. each month, helps you forecast future cash flow, helping you determine how well your business is performing. These insights help you make impactful decisions to drive business growth.

Strategies to improve your cashflow

So, how do you improve your cashflow? Here are seven strategies to consider:

1. Save on international transaction fees

If you process multiple cross-border payments, the FX transaction fees quickly add up, negatively impacting cashflow. Lowering your international transaction fees keeps more money in your business, it’s as simple as that.

2. Offer early payment discounts to customers

One way to reduce late customer payments is to offer a discount if they pay early. Incentivising them like this means you both get something out of it — you get to top up your bank balance and enjoy some predictability, and they get to save cash.

3. Extend supplier terms without damaging relationships

If you didn’t have to pay your supplier invoice at once or as quickly, you’d keep money in your account longer. Broaching this conversation needs to be delicate and considered. You might only decide to ask your biggest supplier, and suggest making a larger order if payment terms can be extended. 

Be as transparent as possible about why you want extended terms. Building trust with transparency can help you build supplier relationships with longevity and mutual respect. 

4. Cut overhead costs

Before getting rid of overheads, make sure they’re not completely necessary. For example, you might think that since your workforce is mostly remote, you can hand your notice in at your office block. But consider what removing your place of work looks like for your workforce. Instead of getting rid completely, you could compromise with a hot-desking space in a similar location. 

5. Sell excess inventory

If you purchase too much inventory, don’t let it sit in a warehouse gathering dust and increasing your warehouse costs. Look to sell it through wholesale companies who specialise in buying clearance stock, like The Stocklot Company or XMBO Trading.

6. Lease assets

Instead of buying assets outright and draining cash reserves, consider leasing the equipment you need. Leasing or hire purchase agreements cut the price of your asset into monthly payments, making your outgoings more predictable while keeping your working capital intact. 

7. Increase profit margins

Healthy profit margins generally sit at around 10%, so if your profit margins are a little thin, it could be time to increase them. Work out your product’s elasticity of demand. Are customers sensitive to price changes? If not, you could increase product prices or look to renegotiate supplier pricing to improve profit margins.

Dutch tax and legal considerations for cashflow

Paying tax for any business can be a considerable financial burden, with usually rigid payment schedules, businesses have to forward plan and save for tax bills. This limits investment in business opportunities. And if you owe tax on your income but your customer is yet to pay their invoice, paying your tax bill becomes even more of a strain on your company's finances.

In the Netherlands, tax rates are relatively standard, with a 19% tax rate on taxable profits under €200,000. And anything over this threshold falls into a 25.8% tax rate. 

The best way to rebalance your cashflow and avoid cash liquidity shortfalls is to plan for VAT and other tax requirements as much as possible. That’s where cashflow management software comes in really handy; the visibility alone is worth it. 

How Airwallex makes cashflow management easier for Dutch businesses

Let's get to the ‘how’. How can Airwallex support your Dutch business and make cashflow management as straightforward and as value-led as possible?

Centralised multi-currency management 

Hold and manage funds in over 23 currencies, all within the Airwallex platform. A single platform means no need for multiple bank accounts or providers - with our platform, receive payments like a local with local bank details, reducing forced currency conversions, saving you money. 

Digital Wealth Management Platform, Endowus, consolidated all financial operations into one platform, resulting in faster payments, reduced costs (saving up to 90% on FX transaction costs), and improved cash flow:

Automated workflow and integrations

Integrate Airwallex seamlessly with your current tech stack, means no more data duplication or inaccurate manual entries. Automate workflows including transaction recording, reconciliation and financial reporting and speed up month-end processes while enjoying real-time visibility into your company finances. 

Efficient international payments

As a global organisation, you'll regularly send cross-border payments, and the fees can soon add up. With Airwallex, you can send payments to over 150 countries, taking advantage of interbank FX rates with a low margin between 0.5% and 1%, which is much lower than traditional banks. 

With Airwallex, you can accept and pay out in Euros, which removes unnecessary conversations, ultimately saving you money by giving you more predictable cash flow.

Expense management and corporate cards

Under one roof, you can monitor corporate card expenses and employee reimbursements and issue both virtual and physical corporate cards with ease to help track all business expenses as they happen. And having the cards automatically sync to your accounting systems is a nice bonus. 

In Airwallex, employees can submit expenses on the go, and OCR technology automatically extracts all the important data, which means a reduction in human error and improved consistency and accuracy in your expense reporting.

Cashflow is key, but how you manage it matters most

Without visibility into how your company is spending its money, you’re strategically blind. Which means you’re making your best guesses based on inaccurate data. By implementing robust cashflow management strategies and using cashflow management software, you can ensure you cover all the operational expenses you need to pay out to remain in business. Software like Airwallex gives you the insights you need to make proactive rather than reactive spending decisions, keeping cash flow balanced.

Knowing where your money is going is only the first step in managing your cash flow. Let Airwallex help you gain that spending visibility to unlock business efficiency and cost savings, and propel growth.