Without Cash Your Business Is Sunk.
Cash Flow Forecasting Is THE Most Important Task In Your Company. Have You Got It Right?
The biggest cause of business failure is lack of cash. Without a positive cash flow forecast even profitable companies can and do go out of business if they don’t have enough cash to pay staff, suppliers, taxes and of course the business owner too.
Businesses may have sales forecasts and profit statements yet too many fail to have a cash-flow forecast in place. Without knowing when and how much cash you will have, you can’t:
- plan your marketing campaigns,
- purchase your stock
- pay your tax or
- make capital investments.
Very quickly, your business grinds to a halt.
What is the most important document in your company?
Your cash-flow statement.
The cash-flow statement should be your Number1 document in your business and should be the basis of your business planning and review.
Unless you know how much cash you have and when more will become available, your business will struggle. It won’t be a happy place for you to work in or to own. Simply knowing that you can meet your commitments will make life so much easier and you won’t dread the phone ringing.
Unless you have the right tools, the initial set-up of your cashflow statement can take some time and it will undoubtedly take a while to get to understand it. And the important thing is to maintain it – regularly, at least monthly.
For many business owners, this means “doing the books” when they should be resting and relaxing so they can focus on their main job – selling more products and services so they choose to use their accountant to make sure the cash flow analysis is up-to-date.
Can you afford to grow?
That may sound a strange question yet many businesses think growing sales is all that’s necessary to grow their business but business expansion, if it’s too fast, has been the death of many companies.
Even in these difficult economic times, businesses do try to grow but it’s vital to go through a thorough financial forecast and budgeting process before you commit to any significant before you undertake any expansion plans or commitments.
There are cash-flow and budgeting tools available but unless you fully understand the meaning of the numbers, you can quickly run into trouble besides wasting a lot of time trying to make sense of it all. So, talk to your accountant about preparing a financial forecast and cash-flow statement that can keep your company afloat and on track.
Call 523 3800 for a free consultation.
