Why is cashflow so central to good financial management? Here’s our plain english guide.
Cashflow refers to the movement of money into and out of your business over a specific period.
In the most basic terms, cashflow is the process of cash moving out of the business (cash outflows), and cash coming into the business (cash inflows). The ideal scenario is to be in a ‘positive cashflow position’. This means that your inflows outweigh your outflows – i.e. that more cash is coming into the business than is going out.
When you’re cashflow positive, the main benefit is that you have the liquid cash available to fund your daily operations and debt payments etc.
On the flip side, if you’re in a negative cashflow position, this can be a red flag that the business is facing some financial challenges – and that some serious cost-cutting and/or revenue generation is needed.
Not having enough liquid cash is one of the biggest reasons for companies failing. So it’s absolutely vital that you keep on top of your company’s cashflow position.
Five key cashflow areas to focus on will include:
Positive cashflow is the beating heart of your business. Working with a good adviser helps you keep that cashflow healthy, stable and driving your key goals as a company.
We’ll help you keep accurate records, track your inflows and outflows and deliver the best possible cashflow position for the business.
Get in touch to chat about improving your cashflow.
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