How to Manage Business Cash Flow

How to Manage Your Business Cash Flow

Small to Medium Size Businesses (SMEs) often suffer cash flow problems, which of course restricts future planning and growth.    Profits may be strong, systems streamlined, and the internals of the business are operating efficiently, but cash flow is letting the side down. 

The business owner’s instinctive move in these circumstances is to seek an automatic funding avenue such as debt, which over time puts cash flow under further pressure.   

Profit and cash flow are two separate concepts, each being reliant on the other.   Business owners often misunderstand this fact.  It is our duty to assist and educate our clients on how to manage and nurture their cash flow.  

Cash flow generation and management requires careful planning and commitment.   In our experience, cash flow reporting is an area that is largely overlooked by SMEs, despite being so critical to the financial health of a business.   Without adequate cash flow, a business cannot survive, despite all else going well.

First and foremost we require a set of accurate and reliable financial reports to assess your cash flow position, relative to the overall health and activities of your business.   Once this has been achieved, we can identify cash flow matters that should be addressed.   Generally speaking, most cash flow problems are critical and are dealt with as a priority.

Thereafter a number of correction or improvement options are presented to you, relative to our diagnosis and your specific circumstances.    These options may involve a number of cash flow improvement and management strategies, as follows:

• Cash Flow Reporting
• Management of Working Capital
• Co-ordinating Timing of Capital Outlays
• Recording of Tax & Interest Commitments
• Revenue Improvement & Cost Reduction
• Affordability Assessment
• Debtor Management
• Negotiating Debtor & Supplier Terms
• Funding Adjustments

With the right tools in place, we are able to train your staff to include Cash Flow Reporting as part of their regular management report preparation.    We educate you on how to read your cash flow reports, and to identify any potential problems well in advance.

Over time, you will start to see a balance sheet with adequate cash flow to meet your obligations without the stress, worry and pressure often experienced by SME business owners, who constantly feel like there is “no cash in the bank”!    Moreover you can more confidently plan for and fund your business growth activities without restriction.