Article by Ralph Rogge, CEO and Founder, Crezco
Cash is king! Cash is more valuable than profit, revenue, stock or receivables, and remains critical for any businesses. It’s an unavoidable necessity to pay for staff and suppliers and provides you with the necessary confidence to invest further in your businesses. Unfortunately, it is also one of the biggest challenges companies face. A recent survey by Capify found that a majority (52%) of UK small business owners are worried about their company’s cash flow over the next 12 months.
There are three key columns affecting cash flow: cash coming in (accounts receivable), cash going out (accounts payable), and access to cash (equity or debt raise). If your business is spending more than it makes, and does not have access to further liquidity, then things are going to dry up quickly.
Seemingly it should be straightforward to avoid cash flow issues. Like trying to lose weight, just assure you burn more calories than you intake: spend less than you make. Nonetheless, it isn’t that simple and so many great businesses with happy customers, especially smaller enterprises, suffer unnecessarily.
There are easy steps that businesses can take to combat cash flow issues. Here are the five we consider important.
More than anything else in their businesses, smart small-business owners recognise that staying on top of their cash flow is critical for the long-term health of their company. Do these things successfully, and your company will be able to survive and thrive even in times of financial instability.