1st January, 2015
Whether your business is growing or struggling, managing your cash flow effectively is absolutely essential, and for many, the very key to business survival. You’ve probably heard the statistic that over 60 percent of businesses that go bust are still profitable, but just ran out of cash.
From a cash point of view, a business is like a sponge — it sucks in ever increasing amounts of cash, and, to get it back out again, you have to give it a good squeeze. If the business is growing rapidly or badly managed, squeezing hard won’t help, as the sponge will just get bigger and bigger.
As the name suggests, cash management is all about managing your cash flow by understanding how a business works, having access to adequate working capital and adopting a planned and proactive approach. Running out of cash is stressful, embarrassing and not good for one’s well being, not counting the additional costs and finance charges that generally follow.