The importance of cash flow equates to how easy it is to run your business and maintain the financial health of your business. To run a business, you need to pay for things and pay staff. You need to have money at your disposal to pay accounts, bills, rent and other operational expenses.
You also need to ensure that employees are paid, in full, on time – no matter what.
Credit is often unavoidable, but you want to avoid taking heavy interest loans and using overdrafts and credit as a float in such circumstances. Worst scenario – you have built a successful business, but hit hard times, and now you face bankruptcy, the closure of business, and lay-offs. All because you didn’t consider the cash flow management over the long-term and setting up controls to ensure liquidity at all times.
Professional cash flow management services:
Cash flow diligence is reflected in a professional cash flow management service. Services that include investment and credit management, operational cost management and other areas of importance in cash flow.
These services are invaluable whether you are starting a new business or taking over an existing business. The cash flow management strategies required for either scenario will have some differences. However, they are based on the same core principles:
The importance of cash flow management:
- It will help maintain a positive cash flow as far as possible, and maximise the positive difference between income and expenses in good months.
- It will help you to build essential cash reserves to help maintain cash flow in lean months, when expenses are greater than income.
The importance of accurate cash flow calculations:
Calculating cash flow is as simple as using a formula. However, cash flow management calculations must include projections, budgets. They must take cash flow management techniques into account. These include offering customers discounts on C.O.D payments, and scheduling ‘delayed’ payments to vendors. The incremental savings can make a huge difference to monthly cash flow.
Align your budgeting with your goals and challenges, creating strategies for growth, optimal cash flow, cost cutting and risk management. Budgeting and cash flow go hand in hand when it comes to your future business financial strategy.
TAT now has tiered budgeting packages to help you achieve your business goals. Tiered and tailored to suit your business needs, whatever they may be, our packages are designed to ensure you reap the benefits of best budgeting practices
You might also be interested in
Virtual CFO Services: For your Small to Medium Enterprise
Small and medium enterprises (SMEs) face unique financial challenges that require specialized attention. However, SMEs often lack the resources to hire a full-time chief financial officer (CFO) who can help manage financial operations, provide valuable insights, and...
Solvency and Liquidity – Introduction
Section 4 of the Companies Act specifically deals with solvency and liquidity and requires the test to be performed under several circumstances. But what exactly is solvency and liquidity and why is it so important? What is Solvency and Liquidity? Solvency is balance...
The Benefits of having a Business Budget
What can a professionally tailored and managed budget do for your business? The answer is – everything! We are all aware of the importance of strategic and realistic financial planning when you start a business. Business plans can have visions and goals, but the part...
With over 23 years of unwavering expertise, I am a seasoned Chartered Accountant committed to financial excellence. My journey in the realm of finance has been marked by astute strategic insights, meticulous attention to detail, and an unyielding dedication to precision. Over the years, I've navigated the complexities of financial landscapes, providing invaluable counsel to diverse clients. My proficiency extends across auditing, taxation, and financial management, coupled with a profound understanding of regulatory frameworks. As a registered professional, I have consistently upheld the highest standards of integrity and ethics, earning a reputation as a trusted advisor in the dynamic world of finance.
