Cash is King!

By Nicola Groom, Finance Director


Cash is king; this is an old saying often used to explain the failure of businesses…

Without the proper cash management small companies can run into trouble. A company may have all the revenue in the world, but without the ability to generate cash, it can easily fail.

Businesses need cash on hand for various reasons, such as salaries, overheads, investing in the new infrastructure and dealing with unexpected expenses.

So how can I manage my company’s cash?

These key steps will help you…

1. Prepare a basic cash flow forecast - Look at the income and spend on a monthly basis for the year ahead

2. Look closely as to how you turn revenue into cash - Encourage customers to pay you quickly or upfront, perform credit checks on new customers and try and be as realistic as possible in the future

3. Look at timings of payments - Can you delay paying suppliers?

4. Have careful cost control procedures in place - Introduce simple procedures, such as, all expenses need to be authorised before purchase

5. Review and make changes to this cash flow weekly - Until your business is stable!

6. Be careful - Don't be fooled into thinking the present is reliable, and try to have a backup plan

Careful cash flow planning is the key to a small company's future success - GOOD LUCK!