Cash flow management is one of the most important aspects of running a small business. The lifeblood of a business, it gives an accurate indication of the business’s health, says registered chartered accounting firm Drumm Nevatt & Associates.
Despite common belief, cash flow management is not just about revenue and expenses; it’s more about the movement of cash throughout a business. “Inadequate cash management or a shortage of free cash flow can lead to excess debt and even bankruptcy,” says Craig Nevatt, Director at Drumm Nevatt & Associates.
Attaining a positive cash flow for your business does not come by chance. Business owners need to regularly examine and manage their cash flow to control the inflow and outflow of cash more successfully and efficiently. It is recommended to monitor your cash flow on a monthly or quarterly basis to ensure you have enough cash to cover your upcoming business obligations.
A key tool of cash flow management is a cash flow forecast. Just like it sounds, a cash flow forecast involves predicting how much money will be coming into and out of the business and when. By examining as many potential scenarios as possible, a business owner can pinpoint and put a spotlight on the areas of highest risk to operations.
“By being proactive and planning for your future cash needs, you can make the correct business decisions that will strengthen your cash position and give your business a solid foundation for growth,” advises Craig.
Growing and expanding your business is an exciting time and cash flow management is key to making sure it happens successfully. Growth requires a healthy cash flow, whether it’s for hiring more employees, hiring more office space, purchasing new equipment or anything else. If you don’t have the funds available to match your planned growth, then you’re quickly going to run into problems. An accurately manage cash flow will let you’ll know when the time is right.
The method of managing an operating cash flow budget is not something that comes easy for most small and mid-size business owners. “We are here to help business owner’s peace of mind so they can sleep at night, knowing that their business is on the right track,” adds Craig.
Dedicated to helping their clients across New Zealand build better business, Drumm Nevatt & Associates (DNA) is a registered chartered accounting firm that provides a wide selection of services with a depth of knowledge and experience that can benefit any business. Check out their cash flow management advisory service here: https://dnaca.co.nz/cashflow-management-advisory-service.
Contact Drumm Nevatt & Associates for all your business development, bookkeeping and accounting needs.
Phone: 64 9 534 4382
Address: 23 Myres Street Tauranga
Phone: 0274 587 724