Cash flow and debt management
Profit is important in the long run, but your business may not be around in a year’s time if you don’t manage your cash flow appropriately now.
Managing your debtors efficiently and cash flow effectively, along with having disciplined processes and systems in place, will bring many crucial benefits to your business.
Efficient processes enable you to capture, manage, measure and analyse all factors that affect the business’ profitability. If you’re in a business where your goal is to get the job done on time, on brief and on budget, disciplined processes are critical.
Competing business pressures often leave debt management by the wayside. Yet this is one of the most critical keys to managing cash flow. Just how efficiently you can minimise the lag time in your business – between purchasing or manufacturing product, or providing services, then billing the customer and finally collecting payment – is critical to your liquidity.
Change is inevitable in business and market trends may initially affect your cash flow. The best way to ensure a healthy cash flow at all times is to consistently review and analyse your cash flow position, your business plan and your operating efficiency.
Sound financial management is integral to long-term success. For more guidance and tips on managing business finances, sign up to the My Business newsletter.