Fri, Jun 22nd, 2018
It’s often said that “revenue is vanity, profit is sanity and cash is king”, and here at Wolverhampton Accountants Copia Wealth & Tax Limited, we are very much in agreement.
Companies that chase sales without considering the subsequent impact on cash flow can end up in difficulty, many of them fast-growing, potentially very successful businesses. Cash really is king when it comes to the fiscal management of a company, particularly given the time that often elapses between paying suppliers (and, of course, employees) on the one hand and collecting the cash you are owed on the other.
Although cash flow management can be challenging, it’s not “rocket science”! By tightly controlling cash outflows and “encouraging” customers to pay quicker, financial pressure can often be reduced or even, in some cases, eliminated completely.
Business owners that prepare cash flow projections (often in a monthly format) can plan accordingly. It’s obviously much easier to approach a lender for some additional short-term borrowing if you are aware in advance of the scale and timing of the problem rather waiting until it’s too late.
Here are some ideas to help your team speed up cash collection:
Here are a few ideas to help you manage your cash outflows:
We would always advise using a spreadsheet (there are free on-line applications), but you can still use paper if you really want to! Start by recording your bank balance at the beginning of a month and add in your projection of cash to be received from customers and other income.
Then, using a separate line for each category or expense, deduct from that your projection of any future cash payments. By examining the resultant closing balance, it is important to identify any future cash shortfalls (as compared with any overdraft facility) to determine an appropriate and timely course of action.
We have helped many businesses prepare monthly cash flow forecasts and can offer sensible and realistic advice on managing your cash. With that in mind, call one of our experts here at Copia Wealth & Tax Ltd on 01902 783172 or click HERE to set up an exploratory, no obligation meeting to discuss how we could do just that!