Hi there!
Let's talk cash flow.
A cash flow shortage is the number one reason why small businesses fail, but even mid-sized and large companies need smart cash flow management to survive and thrive. Insufficient cash forces companies to make difficult decisions about who is going to get paid and when. Unfortunately, this can lead to vendors and suppliers being paid late, being overdue on rent, and even employees waiting on paychecks.
So, are you ready to manage cash flow this year?
#1 PLANNING AND FORECASTING. Effective cash flow management hinges on predicting when cash in-flows will slump to hold onto enough cash during surges to fill in the gaps.
#2 REDUCING SPENDING. Understanding where spending has exceeded (or is on pace to exceed) budgeted amounts is a surefire way to identify areas that need to be looked at more critically. The goal is to improve profit margins without stifling future business growth.
#3 SUSTAINING CASH IN-FLOWS. Anticipate cash flow valleys by understanding whether your business has any seasonality that will affect revenue. Look at revenue numbers and sales figures by month and compare them to historical data from previous years.
#4 FINANCING. When your business needs to bring in more money quickly, you may need to lean on outside financing in the form of a bank loan or line of credit. Working capital provides the resources needed to continue, and even expand, daily operations. Bringing in additional capital improves cash flow, making it easier to manage the lifeblood of the business and facilitate long-term strategic planning.
An accountant can advise on how much cash the business currently has and how much cash is needed to sustain operations over a set period of time.
An accountant’s expertise is instrumental in managing your cash flow.
Hope this helps!
Britt
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