Cash Flow: Cash Is King!
Andrew Jeffers | February 20, 2018
Have you heard the expression - Cash is king?
How about this one, “Sales is vanity, profit is sanity and cash flow is reality.”
What is the common denominator of both of these expressions?
Financial resources are essential for your business.
In simpler terms:
Positive cash flow will keep your business going
Insufficient cash will cause your business to go bankrupt
Let’s take a closer look at what constitutes your business' cash flow and how you can manage it efficiently…
Cash flow, sanity, reality…
A simple definition of cash flow would be - all the incoming and outgoing of cash in a business.
When it comes to the flow of your business’ cash, one of the most important things is understanding it.
I need to warn you, though: every business has its own share of financial fluctuations. As a business owner, you’ll sometimes need to make some tough decisions.
For example, when business isn’t going well, you’ll have to make the necessary budget cuts to get your financial assets up and running again.
But here’s another way to think about your business' financial assset:
Imagine you’re a greengrocer going to the market every morning. You spend $1,000 on produce - that’s $1,000 gone out. But you’ve managed to sell all that produce in your shop that day, so you make $2,000. At the end of the day, your business’ cash flow is $1,000.
Does it make sense?
Let’s say that by the end of the week, a good grocer knows whether they’re going to a restaurant or a pub for dinner.
You might also be interested in: Why Is It Important To Choose Your Business Structure Wisely?
Cash flow management 101
I am going to give you the basics of what your financial asset management should consist of, on a regular basis.
Here’s where it gets interesting...
In my opinion, your business’ finances should be managed daily.
You should keep track of a few basic elements, like:
How much money is in the bank
What’s going out/coming in
Being organised with your financial asset management will keep you up to date with all financial transactions. It will also help you run your business and your cash flow effectively.
I can assist you in making the right decisions when it comes to your business. Whether you have questions about cash flow management or company set up, I am here to help. Let’s get in touch now.