NILESH WAGHELA Business Strategy
KEEPING AN EYE ON CASH FLOW
Keeping an Eye on Cash Flow There are many reasons why businesses fail, but one that tends to be constant in a significant number of cases is money. When the money runs out, it’s hard to keep things going, even if the business has a great idea. Cash flow should be carefully monitored, especially for small businesses.
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Many firms put a lot of effort into sales, but the difference between income and expenditure is just as important. To help start-ups navigate cash flow issues, here are a few pointers: • Have a cash flow statement that's as simple as a spreadsheet showing all projected income streams and corresponding outflows for each month. The balance between the two aspects should be carried over to the following month. • Ensure invoices go out for every product and service sold, and maintain that payments come in within the stipulated credit terms. • Identify issues and take corrective measures as soon as they're realised. Projections at the start of the year provide motivation, but as the months roll on, adjust to reflect reality. • Have a back-up financial plan to rely on in case things go wrong. Some expected income may not arrive on time, sales figures might take an unexpected dip, or an unforeseen event may necessitate huge expenditure. Having a cash buffer protects a business and ensures it can keep running.
Many firms put a lot of effort into sales, but the difference between income and expenditure is just as important. 3
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