Masterminding Cash Flow Strategies in your Business

Hello my friend,

The start of a new calendar or financial year finds many businesses struggling to find cash. Cash management helps to ensure that adequate levels of capital are available to a business for short-term needs such as inventory purchases. A good cash management program can significantly influence the efficiency of operations, which can also reduce overall costs. The goal of most cash management systems is to eliminate surprises related to cash by meeting the daily cash requirement at the lowest cost possible.

Business analysts report that poor management is the main reason for business failure. Poor cash management is probably the most frequent stumbling block for entrepreneurs. Understanding the basic concepts of cash flow will help you plan for the unforeseen eventualities that nearly every business faces.

Cash is ready money in the bank or in the business. It is not inventory, it is not accounts receivable (what you are owed), and it is not property. These can potentially be converted to cash, but can't be used to pay suppliers, rent, or employees.

Profit growth does not necessarily mean more cash on hand. Profit is the amount of money you expect to make over a given period of time, while cash is what you must have on hand to keep your business running. Over time, a company's profits are of little value if they are not accompanied by positive net cash flow. You can't spend profit; you can only spend cash.

Cash flow refers to the movement of cash into and out of a business. Watching the cash inflows and outflows is one of the most pressing management tasks for any business. The outflow of cash includes those checks you write each month to pay salaries, suppliers, and creditors. The inflow includes the cash you receive from customers, lenders, and investors.

Positive Cash Flow

If its cash inflow exceeds the outflow, a company has a positive cash flow. A positive cash flow is a good sign of financial health, but is by no means the only one.

Negative Cash Flow

If its cash outflow exceeds the inflow, a company has a negative cash flow. Reasons for negative cash flow include too much or obsolete inventory and poor collections on accounts receivable (what your customers owe you). If the company can't borrow additional cash at this point, it may be in serious trouble.

In this short video below, I highlight some ideas that you can start to implement in your business today too start growing your cash reserves.


If you would like to find out more on how our team at the Academy can help you, send us an email to wealthvisionmastery@gmail.com or visit our website for further information.

Until next time, take care

Cheers,
Peter Adams
Wealth Vision Mastery Academy Ltd

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