Cashflow Issues​​

Cashflow refers to the movement of money into and out of a business. It s the difference between money coming in (revenue) and money going out (expenses)

Cashflow is critical because it ensures that you have enough money to cover your bills, debts and expenses. It also allows you to invest in, and grow your business, and plan for future investment and growth

Cashflow problems can arise from various sources, including slow-paying customers, excessive spending, unexpected expenses and seasonal fluctuations in income

There are several ways to improve cashflow, such as reducing expenses, getting paid by your customers earlier, negotiating better payment terms with suppliers and securing financing or loans.  Every situation can be different and require different levels of analysis, however.  So it is often best to ask for help, especially from someone outside of your business to give a different perspective

Profit is the difference between revenues and expenses, but cashflow focuses on the movement of money. It’s possible for a business to be profitable on paper but still have cashflow issues if money is tied up in stock or accounts receivable

You can manage accounts receivable by invoicing promptly, offering discounts for early payments, and following up on overdue payments. You can also consider factoring or using invoice financing services.

A cash flow statement is a financial statement that shows the inflow and outflow of cash over a specific period. It helps you track how cash moves through your business and identify potential issues or opportunities.

If you have more expenses than income, you may need to cut costs, renegotiate contracts, or explore additional sources of revenue. You might also need to consider short-term loans or lines of credit to cover essential expenses.

In emergencies, you can consider selling assets, borrowing money, reducing staff or hours, and prioritising essential expenses over discretionary spending.

Cash flow projections involve estimating future cash inflows and outflows. You can create one by analysing historical data, considering future sales and expenses, and accounting for any expected changes in your financial situation.

If you're unable to manage cash flow problems on your own, it's advisable to seek assistance from financial advisors, accountants, or business consultants who specialise in cash flow management.

To prevent cash flow issues, establish a budget, build up an emergency fund, maintain good relationships with customers and suppliers, and regularly review and update your financial forecasts