Money
Issue No. 44 - December/January 2008
Cash is business oxygen
by Mr Kel Spencer
In today’s economic climate the adage, “cash is like oxygen”, has never rung so true.
A healthy cash flow is needed to ensure a business is never caught out-of-pocket and is well equipped to cover unexpected costs.
To be successful, a company needs to balance cash flowing in with cash flowing out. It’s about knowing where your money is, staying on top of your finances and having the right systems in place to grow a profitable business.
Where do I start?
Maintaining healthy cash flow is essential for the success of any business. It is important to know where you stand financially and establish clear procedures and processes to manage all transactions.
To do this, determine what working capital currently exists within your business, identify all incoming and out goinge xpenses andc onsider any seasonal fluctuations your business might experience. It is also an idea to investigate financial tools and products in the market that are available to help you manage your cash flow. The next step is to develop your cash flow forecast. This will help you track your finances within the cash cycle - from paying for goods, services and suppliers to collecting revenue from customers.
Funding your finances
Given the uncertain times ahead, there may come a stage when you will need to think about alternative funding solutions. Short term finance options are generally used to cover fixed overhead costs as well those unexpected o...
