UNDERSTAND WHERE THE CASH IS GOING

Cash Flow Management - “Why aren’t I making money?

 One of the most significant challenges for any small business is managing cash flow.  In the end, from a financial point of view, the ultimate measure of success is what money is in the bank. While insufficient cash is a sign that other issues exist, if the cash runs out it will end a business.  A business may well be profitable. It may have great future opportunities. All l this counts for nothing it the cash dries up.

So how can you better understand where the cash is going? What can you do to better manage this.  There are some key considerations:

  1. Are you profitable? If the business’ % Gross Profit is not high enough to cover all your costs and debt servicing, there is nothing you can do to manage cash.  You must get this sorted.

  2. Are you being paid? You need to ensure your terms of trade are sound and you are managing aged receivables. 

  3. Do you know where all the cash is going? While this would seem a simple question it is not always obvious and deeper analysis may be required.

  4. Are you on top of all your tax obligations?  You need to understand what GST you need to pay and when and what your provisional and terminal tax obligations are for the year.

  5. Are you taking the correct amount of money for yourself? Whether you are a PAYE employee or taking drawings you need to manage what you are taking from the business.

  6. Have you got enough working capital to operate?  This is simply the amount of money at hand each month to pay all the bills.  You may need a facility with a lender to help. 

  7. What about all the other moving parts? To understand your cash, you need to look everywhere. Is there waste?  Is your stock moving? Do your processes to protect you from fraud? Have you got the best loan structures in place?

Get in touch to get your business’ cash under control

If you’d like to find out how we might be able to help you in your specific situation, simply fill in the form below and we’ll be in touch to have a quick chat to see how we can best help you.