Why is cash flow management so important?
Let’s begin by addressing why this is such a crucial area of your business to have under control.
Did you know that a lack of understanding around cash flow was the cause of 82% of startups failing in 2019?
Simply put, cash flow is the money coming in and out of a business. Successful management ensures that expenses don’t exceed the profits. It’s so important to have it under control as even if your income’s looking fantastic, those expenses can and will add up.
Pre-lockdown, this could be achieved through good organisation and access to tools such as integrated software systems. Unfortunately, Covid-19 has brought with it new areas to consider.
Flexibility = Sustainability
The most imminent risk to cash flow during the pandemic is finance-related problems from your consumers. As offices furlough or begin remote working, delays in invoices are a possibility - one that you may not have predicted but will certainly have an impact on your cash flow management.
It's in these times that flexibility in your agreements become incredibly attractive. These could be anything from a % up-front to a monthly payment plan to make costs seem more manageable to the consumer. This not only keeps your clients happy, but also protects your business from uncertain times such as this.
We understand that you may find these forms of payment more difficult to track. Fear not, at the Accountancy Cloud we look after your numbers so you don’t have to. It’s simple. Managing your finances and helping you to understand them is what we do.
Being Aware of Financing
We get it. Your main focus when it comes to finances is probably profit and loss. Are we right? However, during such uncertain times, you may need to consider financing options. As an Accountancy Cloud customer, your dedicated financial expert is on hand to talk you through the lines of credit available, as well as any government support for businesses affected by Covid-19.
If your cash out-flow is worrying, it may be worth considering your variable costs. Our real-time business insights allow you to quickly check what your money is up to. And you can highlight what isn’t essential for your business during a crisis. By going through and making changes to these areas now, you’re far less likely to have to make the much tougher cuts down the line, such as redundancies.
Ready to learn more about successful cash flow management? Download our E-Guide today and discover all the secrets you need to know to become a cash flow master.