What Is Cash-flow Management for Small Businesses

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What Is Cash-flow Management for Small Businesses

What is Cash-flow for? Without cash-flow management , your business is doomed.  Cash-flow is the lifeblood of every business.  It is vital to managing the peaks and troughs in your business. Having enough cash to meet your short term obligations is essential to your business survival.  Without a good cashflow system in place, your business could fold before it gets he chance to grow.

So what makes up a cash flow?  The main flow of cash into your business as a result of sales, purchases, overheads and other non trading or capital items like bank loan payments, hire purchase and leasing agreement payments and long term loans.

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Understand the major causes and warning signs of cashflow stress.

A number of reasons that can lead to cashflow stress are your your working capital increasing faster than your sales/revenue, making sales for the sake of sales at the expense of profit margin, loss of a key client or customer, decrease in general demand, competition from new entrants, general industry and economic downturn.

With this in mind, and as a small business owner, you need to be aware of the warning signs – difficulty in you obtaining finance for your business, creditors pressuring you for payment, your inability to settle your tax liabilities and wages, especially on time and impending default on your banking and other investor covenants by your business.

So what can you do to ensure you have a robust and efficient system in place to manage your cashflow, and applying the best practices to avoid cashflow stress?   Managing cashflow can be a challenge, and some areas that can be crucial in helping you when under pressure is having a clearly defined credit policy, good cash management and effective controls.

To forecast your cashflow, these are some areas of your business you will need to pay attention to:  – sales, cost of sales, overheads, capital cash, capital repayments, VAT and other taxes payable.  For effective forecasting you need to take account of both long and short term sales, staged payments, deferred payments and receipts, and planning your expenditure for purchase, your overheads and capital.  Be aware, and keep track of when your VAT and taxes are due, and measure your actual s against forecasts

Through June and July, we will be holding a series of 1 Day Training Courses at the Dugdale Centre in Enfield.  Book your place now.  Places are limited.

Risk Management – 15th June.   £197

Crisis Management – 22nd June.  £197

Business Forecasting – 29th June.   £197

Cashflow Management – 6th July.   £197

Key Business Performance Indicators – 13th July.   £197


Good luck with your business.