You’ve probably heard the phrase ‘cash flow is king’ and with tough economic times for many Australian SME’s never has this been more true. Cash flow is what separates a thriving business from one struggling to stay afloat.
It encompasses all revenue generation, operational expenses and investment activities. Businesses that manage their cash flow efficiently ensure more cash is entering the business than leaving it which enables them to grow and expand.
Get a Cash Flow Plan
With the start of 2024 it’s important SME owners have a plan in place for their cash flow so they can invest in new growth opportunities, expand operations, acquire assets and explore strategic developments. Cash flow allows owners to realise their business goals but it’s important to have an accurate forecast.
Accurate cash flow forecasting is the foundation of sound and comprehensive management. It involves predicting future cash inflows and outflows so owners know when to expect periods of surplus and shortfalls and can implement strategies to navigate the challenging times.
Where it Goes Wrong
It’s a tough time for SME’s at the moment. Rising overheads, supply chain issues, high staff turnover and rising interest rates – it’s no wonder many are struggling with the day to day running costs.
Some of top mistakes small businesses make when it comes to cash flow include
- Failing to manage payment delays
- Expanding too quickly without enough working capital
- Poor inventory management
- Failing to generate new sales leads
