Managing Your Cash Flow

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We have all heard the phrase ‘Cash is King’. It is unlikely today that controlling your cash position alone will be sufficient to prepare your business for the future. However, it is a vital first step.

Many business owners and managers find that the day-to-day challenges of running a business may get in the way of effective cash planning.   But as cash flow planning can be extremely useful, we have set out below a few thoughts and tips to help get you started.

The Benefits of Accurate and Timely Cash Flow Information

It allows you to:

  • See at a glance if you are on target to fund current operations and planned future growth.
  • Avail of opportunities to use surplus cash or manage seasonal fluctuations as well as being prepared for potential problems.
  • Be well positioned to see immediately the potential effect to your ‘bottom line’ cash of changes in selling prices, quantities sold, costs of purchases staff costs or other expenses.
  • A cash flow forecast can allow you to make informed management decisions , particularly useful in today’s competitive environment.
  • Be better prepared for meeting the bank manager or other funders.

Potential ways to Improve Your Cash Flow

In very simple terms, your cash balance can be improved by:

  • finding ways for your customers to pay quicker,
  • negotiating better credit terms with your suppliers
  • ensuring you are not holding excessive stock.
  • reviewing your tax costs to ensure you are availing of all allowances and payment options
  • ensuring you are receiving all eligible external funding
  • accessing non traditional funding options

A Final Word

In today’s market, cash may no longer be King but cash management is still a vital process in any successful business.  You should continually seek ways to improve your cash flow in order to maintain your current operations and grow your business.

While making cash flow improvements, do remember to consider other implications such as the effect on customer and supplier relationships.

If you would like help preparing a cash flow projection which you can then update yourself, or to discuss, in more detail, ways to improve your particular cash flow, contact us.

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