Cash Or Crash – The Importance Of Managing Cash Flow

by | Aug 14, 2013

One of the keys to being successful in any business is the ability to properly manage the cash flow.  Every business ultimately relies on cash to pay employees and suppliers in order to provide the goods and services to customers so that it can remain in business.

While it’s certainly possible for many businesses to access a line of credit to smooth out any fluctuations in cash flow so they can still acquire goods and services to provide their customers, this will only work to help a business to stay afloat in the short term.

Without a long term plan to properly manage cash flow so that employees, suppliers and even taxes and other fees are paid on time, a business will ultimately fail.

If you find that you are often robbing Peter to pay Paul in your business just to stay afloat, you might want to consider using the following strategies to better manage your cash flow.

Have a Plan

Make a realistic plan for your cash flow that is at least 12 to 16 weeks in advance. You may find that having a calendar with a forecast of all of your expected cash outflow and intake for several weeks will give you a better idea of how much cash you will have on hand during that time to pay suppliers, employees and others. If you see that you may have a shortfall during this period, you would then be able to possibly speak with suppliers and others to negotiate extended terms of repayment, or to make other plans if that is not possible.

Consider Opening a Line of Credit

If you find that there are time periods where your cash flow is not enough to cover operating costs, consider opening a line of credit, or having a credit card with a large enough available balance so that you have funds available to pay suppliers and others when you have a shortfall. While you might pay a bit more interest if you do have to tap the credit line, it is important to your reputation and the survival of your business to have a plan in place to cover operating costs to prevent late payments.

Open a Window if a Door Closes

If you find that you will have a cash flow shortfall during your planning stage, you aren’t able to negotiate other terms with a supplier and are not able to draw upon savings or a line of credit, it’s time to think outside the box in order to continue to make payments on time. Take a look at the hard assets of your business and consider selling those that are unused or under-performing.  This can free up some cash so that you can make your payments on time.

With careful planning, even a sharp shortfall in cash flow can be dealt with so that the security of your business is preserved.

You can learn more about the importance of using careful planning of your cash flow by reading this recent article in The Sydney Morning Herald.

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Sophie has been a tremendous support and guiding light for my business. I have continually succeeded when acting on her advice and by using her services. Her products are fantastic and her ideas and accuracy is out of this world. I would never hesitate to recommend Sophie’s services and I would invite anyone to contact me for a referral.
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Sophie has the spirit of the Entrepreneurial Business Owner! Whether she is running a successful single family website, creating a product for small business owners or running her own bookkeeping agency she is always right on track as to what small business needs. If you want to speak to someone who not only knows what business owners are going through-she also does something about it- then don’t miss out, connect with Sophie! She is someone who can not only think outside the square- she has true strategic thinking; which is often spoken about but is rarely truly placed into action.
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Sophie is an amazing business woman. She is able to take the complexities of business and break them into manageable pieces for small and home based business owners to work with. She’s clever, creative, supportive and very generous. She’s the reason that so many small businesses are doing so well. If yours is a small or home based business then Sophie is someone you need to know.
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Sophie is an incredibly savvy business owner, for whom I have great respect. She has always been very clear and detailed in her instructions, is always very focused on her business objectives, and displays a business model that you can aspire to as a small business owner. I have no hesitation is recommending her work at The Accounts Studio.
I have had many a chat with Sophie on the networking circuit. Sophie has a strong profile and reputation within business circles and I wouldn’t hesitate to recommend her to any soho needing direction, support and encouragement. I have a passion for educating small business myself and wholeheartedly support Sophie in her endeavour to actively reduce costs for those who may be unintentionally making uninformed decisions relating to business management. Many business owners are unnecessarily outsourcing tasks which are misdirected or can be achieved inhouse.

Gai Hook
Virtual Sales Strategy

2017-10-13T09:32:05+00:00

Gai Hook
Virtual Sales Strategy

I have had many a chat with Sophie on the networking circuit. Sophie has a strong profile and reputation within business circles and I wouldn’t hesitate to recommend her to any soho needing direction, support and encouragement. I have a passion for educating small business myself and wholeheartedly support Sophie in her endeavour to actively reduce costs for those who may be unintentionally making uninformed decisions relating to business management. Many business owners are unnecessarily outsourcing tasks which are misdirected or can be achieved inhouse.
I’ve worked with Sophie as a contributor to Confessions of a Mumpreneur – a fantastic book that she dreamt up, edited and produced. Apart from producing fabulous books that help so many others realise their entrepreneurial dreams, Sophie is an astute business person who is making her mark on her own terms. Watch this space – I’m sure we’ll see and hear a lot more from Sophie Andrews in the years to come.

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Jennifer Dalitz
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I’ve worked with Sophie as a contributor to Confessions of a Mumpreneur – a fantastic book that she dreamt up, edited and produced. Apart from producing fabulous books that help so many others realise their entrepreneurial dreams, Sophie is an astute business person who is making her mark on her own terms. Watch this space – I’m sure we’ll see and hear a lot more from Sophie Andrews in the years to come.
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