Businesses often focus on profits to determine how they are tracking, but at Aspen Corporate, we find that keeping an eye on your cashflow is just as important, but often ignored.
Cash flow by definition, is a measurement of the total amount of cash moving in and out of your business during a given financial period.
Why should you maintain a positive cashflow?
COVID-19 has highlighted the necessity for any business to maintain a positive cash flow position to assist with business continuity.
ScotPac’s SME Growth Index, released on 18 October found that almost 80% of small businesses surveyed reported having cash-flow issues in the past 12 months. The survey also found that just under 50% of respondents closed an office or shopfront in the past 12 months, moved premises or negotiated rent reductions.
There is no doubt that a positive cash flow helps build a better business as you always feel in control of being able to meet your businesses commitments providing you with a financial security.
You can make timely key decision for your business as they arise.
It assists in allowing you to boost your buying power.
Your business can take on new initiatives as they arise with confidence, including new technology to assist with your business growth.
Your business can assess taking on new investors and opportunities.
It provides any third parties/stakeholders with confidence in continuing to partner with your business (e.g. Financial Institutions, Government Bodies, suppliers, customers, and employees).
Tips for positive cash flow for SME Cash Flow
- Pay attention to cash flow as key indicator of business health,
- Maintain some cash reserves in an offset bank account,
- Reduce debt as much as possible, and look for the benefits of low interest rates,
- Perform appropriate checks when offering credit to your customers,
- Implement an online management cash flow tool – this will allow you to assess your business’s ability to respond to daily and future cash requirements,
- Consider applying for the Federal Government's SME Recovery Loan Scheme which was recently extended so that more small businesses are eligible, and
- If cash flow forecast is poor, seek professional business services advice.
Aspen Corporate has over 30 years of experience working with business small and large on cash flow management. If you would like assistance in understanding how to track cash flow, or are concerned about your cash flow position, contact your Aspen Corporate Advisor today.
