The Importance of Cashflow

Balancing scales

Small businesses often focus on how much money they are going to make, the amount of turnaround and, significantly, how much profit their business is going to generate. However, in looking at the bigger picture, many small businesses lose sight of the day-to-day cashflow of their business; which can cause major problems for both fledging and established businesses.

Of course, as a business it is vital to have clear figures with regards to cash projections and the amount of money you plan your business will generate. However, if your cashflow is not under control, your business can ultimately lose out regardless of whether your profit figures show you as “in the black”.

Cashflow is, if the correct tools are used, an easy thing for you to keep an eye on. It doesn’t have to be time consuming or laborious, but could ultimately be the thing that keeps your small business afloat.

Cashflow is, very basically, the balance of money coming in versus money going out. For example, if you order a large amount of stock on day one with an invoice that has to be paid at day 30 that is outgoing funds. If you fail to sell the stock before the invoice is due to be paid then your cashflow is unbalanced; you have more money going out that you have coming in, and for some small businesses that can be disastrous.

There will be times, with every small business, that investment is necessary; stock and supplies need to be bought (in most cases) before they can be then sold on to our customers. However, this can easy cripple a business if cashflow is not being accurately recorded and taken in to account.

Small business owners often struggle with lack of time; their main focus is on growing their business, and quite rightly so. That is why my company, WinWeb, have developed a cashflow tool especially designed for busy small business owners, to make it easy for you to see just how your balance sheet is looking at the click of a button.

However you decide to keep an eye on your cashflow, make sure that you always keep one eye on the scales to give your small business a great chance of staying afloat.

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