Are you on top of your cash flow?

are-you

What is cash flow? Its technical definition is “the total amount of money being transferred into and out of a business, especially as affecting liquidity” this pretty much translates to how many money you have at your disposal, cold hard cash!

It’s important to remember that your liquidity is one thing you need to concentrate on, as a business, from the get go, not when it’s too late. Cash flow is in the top 3 reasons small and medium business fail.

Plan ahead, most businesses know their expenses well, so plan for them, if you know a big purchase is coming up in 12 months’ time, divide the cost by 12 and put that amount aside each month so when the expense is realised it won’t dent your cash flow.

Cash comes from payments of accounts right? So make sure you make your payment deadlines clear and whether there are any penalties for a late payment or even more appealing a small discount for paying on or before the due date.

Remember when your parents told you to put a dollar away per week for 18 years and you’ll have $936? Well the same is true for business, put aside 5/10% every invoice that will cover your GST or ATO payments, believe me it’ll make tax time much more pleasant.

A business loan is also an excellent idea if you’ve got money coming in but need access to cash right now for a big purchase, this type of forward planning will benefit you in the end.

The saying “Cash is King” doesn’t come from nowhere so plan, be smart and think forwards at all times.

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