A handy guide to Cash flow – NCC Advisory Sydney & Gold Coast

Managing cash flow is one of the most important aspects of operating a business. Too many small businesses fail due to the inability to appropriately manage their cash flows.

What is Cash Flow?

Importantly, cash flow is not profit. Profit is simply the amount that the revenue exceeds the expenditure.

A business can be profitable but can have poor cash flow. Vice versa, a business can be unprofitable but have good cash flow.

Whilst it would seem logical that being profitable means that you would have good cash flow, this is not always the case. There may be other liabilities or borrowings that are causing strain on the business. In the alternative scenario, a business owner may be personally funding the unprofitable operations.

Why does it matter?

There are many reasons a business needs to carefully manage their cash flows. Some of these include:

To fund day to day operating costs
Plan for growth
Deal with seasonal fluctuations
Be able to make better decisions

How can NCC Advisory help?

Managing cash flows requires careful planning and coordination.

We are able to assist by having your books and records up to date on a daily basis (or on another regular basis, as agreed).

We produce quality reports and set up frequent meetings to discuss these with you. Having financial information available in real time with quality reporting helps you plan for the future.

We can also assist you to prepare budgets which incorporate forecasted cash flows. This is extremely important to allow you to plan and prioritise where funds need to be appropriated.

Having a robust accounts receivable function is also hugely important in managing cash inflows. We are able to help you implement this, and/or manage the entire function for you. This would include making sure invoices are being sent out promptly, incorporating strict payment terms and setting up automated follow ups. We would also run regular debtor reports for your review and subsequent discussions.

It is equally important to manage a healthy accounts payable function. Having bills entered on a timely basis, scheduling payments for your authorisation, and running regular creditor reports are all ways we can assist with managing this for you.

For more information or to discuss how we can support your business, please do not hesitate to contact our office.