Step 2 - CASH FLOW

Cash flow is the lifeblood of your business, and if you can’t circulate it your business will die. Even if your overall business is profitable, you may still go out of business if you don’t have enough cash flowing in to cover everything. 

Cash flow is the money flowing in and out of your business, and ideally you want a positive cash flow (with more money coming in than going out). Monitoring your cash flow is essential for business growth, allowing you to assess if you have enough funds coming in to cover expenses, bills and upcoming financial commitments. Monitoring your cash conversion cycle as well will uncover what’s locking up your cash as well as debtor and credit days.

To help increase your cash flow, consider:

• Are your customers paying on time?

• Could you offer a discount for those paying early?

• Can you negotiate different payment terms with suppliers (without impacting price of purchase)?

• Would it be better to lease instead of buying equipment?

• Reviewing your staffing, could you have flexible staffing arrangements?

• Could you better manage stock and put processes in place to reduce over-ordering?

If you’re not sure where to look - or even what’s eating away at your cash flow - booking time with our accounting or business advisory team could be a great first step and give you the insight you need to take action. 

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If you would like to discuss further please contact us:
McNamara and Co - Chartered Accountants, located minutes from the Melbourne CBD
mcnamaraandco.au/contact
Phone +61 3 9428 1062
Email admin@mcnamaraandco.com