Ask any business owner how they're doing with cash flow, and you'll probably hear something like: "We're good. We’ve got a handle on it."
In fact, our Cash Flow Compass Report found that 95% of small business owners feel confident in their ability to manage cash flow. That’s not a typo. Nearly everyone thinks they’re in control.
But when you dig a little deeper, the numbers start to shift.
Only 43% of those same businesses had reserves to cover recent disruptions. Nearly 90% faced unexpected cash flow issues in the last year. Three out of four said those cash flow issues held them back. And only 31% are actively optimizing cash flow.
That’s not denial. It’s a disconnect.
This isn’t a story about bad business owners or lazy bookkeeping. It’s about a system that encourages hustle over habit and gut feel over structure.
So, let’s talk about what’s really driving the cash flow confidence gap and what it takes to close it.
Why business owners overestimate their cash flow control
Entrepreneurs are wired to be optimistic, bet on themselves, and figure it out when things go sideways. That mindset is part of what makes them successful, but it's also what fuels overconfidence.
Behavioral economists call this the overconfidence bias: the tendency to overestimate our skills, underestimate risks, and believe we’re the exception rather than the rule. For small business owners, this shows up in how they think about cash flow. It might sound like:
“If I can make payroll, I’m doing fine.”
“If the account has money in it, we’re good.”
“I’ve been doing this for years—I know how to manage cash.”
But confidence isn’t the same as control. Most owners are reacting in real time, patching together spreadsheets, eyeballing the bank balance, and hoping the next invoice hits before the next bill clears. It works, until it doesn’t.
The hidden cost of cash flow overconfidence
The confidence gap has real consequences. Our Compass data shows that 76% of business owners say cash flow issues negatively impacted their company in the last year, and nearly a third missed three or more opportunities due to this.
That's not theoretical. That's delayed hires, deferred investments, and nights spent staring at the ceiling doing math at 3 a.m.
The Federal Reserve's 2024 Small Business Credit Survey backs this up: 51% of firms cited uneven cash flow as a challenge. And when cash is this unpredictable, even profitable businesses end up borrowing just to stay afloat. The survey shows that 59% of small businesses sought financing in the prior year. The most common reason wasn't growth. It was covering operating expenses.
Margins are tight and costs are rising. Cash gets tied up in invoices, debt, taxes, inventory, and a hundred other places. And too many owners realize too late that "profitable" doesn't mean "prepared."
Why the cash flow confidence gap persists
If the numbers are so stark, why do so many business owners still feel confident?
Because for many, financial systems are a luxury. When you're juggling clients, vendors, staff, and endless decisions, checking the bank balance feels like a win. In addition, many owners were never taught how to build systems.
According to a 2025 QuickBooks survey, 43% of small businesses consider cash flow a problem—and 74% say it has worsened or stayed the same over the last year.That means the majority of businesses aren't solving this on their own. The instinct-driven approach isn't working, and without intervention, it won't get better.
Most small business owners rely on their bank balance to guide financial decisions. Only a fraction review detailed financial reports weekly. Even fewer forecast cash flow month to month. Most aren't using tools to track patterns or predict shortfalls. They're flying on instinct.
What real cash flow control looks like
Here’s the good news: closing the confidence gap doesn’t require an MBA or a finance team. It just takes a shift from reactive to proactive.
Right now, only 31% of business owners are actively optimizing their cash flow. That means there's a massive opportunity to gain an edge simply by doing what most others aren't: building structure.
"Most small businesses fail because of poor cash flow management—but business owners who review their financial statements weekly have a much higher success rate," says Gretchen Roberts, CEO of Red Bike Advisors. "Knowing your numbers is the key to sustainability, growth, and long-term success. Just start. In a year, you'll be a pro."
Real control means:
Reviewing numbers weekly. Start by tracking metrics like operating cash flow, burn rate, and days cash on hand. These tell you not just how much money you have, but how long it'll last and whether you're trending up or down.
Separating funds using multiple accounts to earmark money for taxes, payroll, profit, and expenses. For example, Randy Lau, founder of Made With Lau, uses multi-account structure to keep reserves separated from day-to-day spending.
Forecasting cash flow 30, 60, and 90 days out. A basic spreadsheet and 20 minutes a week is enough to start spotting problems before they become emergencies.
Automating money movement. Set recurring transfers that allocate funds as soon as cash comes in. Solutions like Relay make this easy with custom rules and built-in automation.
Getting support. Even a quarterly check-in with a bookkeeper or advisor can help you catch blind spots, make smarter decisions, and move with more confidence.
We’ve seen firsthand how small changes in financial habits can have an outsized impact. Owners with even 30 days of runway make calmer decisions, and those who track cash weekly recover from setbacks faster.
Relay is a financial technology company and is not an FDIC-insured bank. Banking services provided by Thread Bank, Member FDIC. FDIC deposit insurance covers the failure of an insured bank.
What's holding business owners back from better cash flow
If the solution is simple, what’s the holdup?
It comes down to time, mental bandwidth, and the myth that systems are only for "bigger" businesses. There’s also that pesky old belief that if you’re selling, you’re succeeding.
But growth doesn’t fix cash flow problems—it magnifies them. The best time to build structure isn't after you scale. It's now.
And if you think structure means giving up freedom? Flip it. Control is freedom. It means spending without panic, planning without guesswork, and sleeping better at night.
How to close the cash flow confidence gap
It’s great that 95% of business owners feel confident in their cash flow. After all, confidence fuels momentum. But if only 43% have cash reserves, and 88% faced unexpected cash flow issues last year, then confidence isn’t enough.
The good news? You don't have to overhaul everything overnight. Start small.
Pick one action to take this week:
Open a separate account for taxes (even if it's just at your current bank).
Block 30 minutes on Friday to review your cash flow from the past month.
Set up one automated transfer—$500, $1,000, or whatever feels doable—into a reserve account.
Just pick one, then keep going. Because when confidence is backed by clarity, your business gets a whole lot more resilient.
Want to dig deeper into what’s driving (and draining) small business cash flow in 2025? Read the full Cash Flow Compass report.
Relay is a financial technology company and is not an FDIC-insured bank. Banking services provided by Thread Bank, Member FDIC. FDIC deposit insurance covers the failure of an insured bank.
