Cash flow or fail! Because money talks. And it is especially talkative when you don’t have any, nagging money worries that keep people up all night and worried all day.
Most of us have been broke at some point in our lives. Most people will have had to adopt certain strategies or habits to ensure they get their finances back on track. And that is without us even considering the complex landscape of the business world.
Cash flow – a brief overview
Cash flow is the money that flows in and out of a business over a given period of time. It is important because it allows you to stay in business.
How does it do that?
Money coming is used for many purposes. You use it to pay your bills, salaries, rent, etc. It also allows for catering to unexpected expenses such as equipment failure, or natural disasters. Another thing that it is vital in is growth investments. Without cash flow, your business may miss out on investment opportunities, preventing it from reaching its targets.
A positive cash flow allows a business to operate smoothly, invest in growth opportunities, and stay resilient when unexpected challenges arise.
You need to know when money is coming in and coming out and you must remain mindful of contingencies. An effective “receivables” or “credit” management plan will ensure reasonable and timely repayment of funds owed. Thus, you’re more accurately able to forecast estimations of what monies you will have at the end of the month. This enables you to be mindful about to who your money goes out to and when. For example, you may need to pay employee salaries or landlord rent and utilities (fixed outgoings). These should be reconciled first before suppliers who might be willing to give you some grace time. After all, sustainability and growth require cash. Pure and simple.
Be savvy with your finances
Following the events in recent years, the business climate has changed. This is why it is really important to be in the know when it comes to what your business needs, old or new. Be savvy with cash flow forecasting.
We too know the strain and anxiety of the current climate and the pressure it puts on business owners and businesses alike. But not to worry, we’ve got your back! With the right knowledge base and a pre-prepared strategy, we can help insure against cash shortfalls. And also assist you in building up a cash balance to plug any gaps and better manage your revenue stream.
Cash flow support
Cash flow is the lifeblood of a business new or otherwise. A sustainable flow of cash refers to an ongoing stream of revenue. In these challenging times, it is more important than ever to ensure you have support when managing your business and its finances.
A cash flow report tells you what cash is flowing in (measured by receipts) and flowing out (measured by payments) of the business over a period of time. Without the appropriate consideration or forecasting of cash flow, a business could find itself insolvent if unable to obtain new finance and generate cash.
No cash equates to no business. Poor cash flow management is one of today’s leading causes in the (unnecessary) failure of new businesses. Whether it is a necessary reshuffle or helping you employ better practices we can show you how to be more proactive with your finances. Our cash flow software and financial planning tools for SME are a great way to start managing your finances. Because it affords your business greater flexibility in the face of newly surfaced teething problems and making critical business decisions.
Investors and cash flow
Potential investors will want to see operating cash flow along with revenue and net income. This will help to get a more overall accurate overview of the business figures in full. Investors will want to view cash flow because it is a reliable way of determining business health.
A decent cash flow forecast should address two important areas; WHEN do you receive and pay cash followed by HOW MUCH do you receive and pay cash from/to?
Conclusion
Numbers are the most frightening part of business but they’re always most truthful. In these times of uncertainty, with the right guidance you can harness the power of numbers. With our online tools, you can get ahead of the curve and become the business rockstar we know you can be. Remember, a close eye on cash flow will always pay off.
Sign up for your FREE trial to Numbers Knowhow, the revolutionary cashflow software designed to empower you with the numbers you need to transform your business. With Numbers Knowhow, you’ll have access to powerful tools and features that will unlock a world of financial understanding and growth.