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Tesla proves cash flow affects businesses of all size

Tesla proves cash flow affects businesses of all size

Cash flow woes are not a problem isolated to small businesses, with renowned US technology giant Tesla seeing its share price fall on concerns its cash reserves are drying up.

The electric car and renewal energy behemoth made headlines around the world this week after its share price fell as much as 6.6 per cent following reports that it had asked suppliers for refunds on payments it had already made.

Such a move was allegedly made in a bid to shore up the company’s books and help it look as if it was turning a profit.

A spokesperson declined to comment on questions about the validity of the reports or whether the Australian arm of the business is affected.

Instead, My Business was referred to Tesla’s next quarterly financial results update, which will take place on 1 August.

It marks a high-profile addition to the pool of businesses that have or continue to struggle with the issue of maintaining positive cash flows.

Earlier this month, an Australian poll suggested that as many as one in two business leaders have little to no idea of their working capital and other financial performance metrics that are crucial to maintaining sustainable business growth.

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Cash flow can be affected by a variety of factors, including an influx of invoices, irregular payments, a failure to adequately provision for taxes, sudden foreign exchange movements or unexpected cost blowouts.

Accountant Alexander Laureti, of LMS Advisory, previously told the My Business Podcast that there are many myths and misconceptions around business finances that he sees all too frequently among his clients.

These include how to address overdue invoices, proper budgeting techniques and even how regularly the advice of an accountant should be sought.

 

Tesla proves cash flow affects businesses of all size
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