Local News

7 September 2011

How’s the cash flow? Is cash flow the hardest thing to control in your business?

The saying ‘Through boom and bust cash is always king’ is true but equally important to having cash in the bank is the need to ensure a consistent flow of cash from customers.

Late payment by clients and, in particular, large customers imposing extended settlement terms on suppliers are both contributing to the current challenges. These sorts of trends make it increasingly difficult to manage credit risk and to maintain a healthy cash-flow.

Many businesses have plans for growth but developing products and markets, taking on new customers and recruiting staff against potential expectations all impact on cash-flow. Decisions made based on inaccurate information can have dire financial and reputational consequences.

Careful cash management should be a key part of daily business practice. Aspects to consider are:

- Credit control – make credit checks on customers and chase late payments regularly.
- Fulfilling orders – if you fail to deliver to specification or are late you may not be paid – ensure production, delivery and quality control are all efficient.
- Accounting information – keep key ratios under review and these should give alerts to potential cash-flow problems.

Cashflow is a reflection of each part of the business. As the economy strengthens, growth and new opportunities may arise, so cashflow can remain under pressure as businesses try to finance increased activity levels. Keep a close eye on cash management - your business dreams will unravel if you don’t.

Back to news