News
It’s the old adage…. “cash is King”
03 Dec 2021
By Andrew Hague, Partner
As a business owner, one of your key financial aims is to make enough sales, at a big enough margin, to generate profit from your business. But how does profit differ from cashflow? And why is cash king?
You might think that delving into the accounts is a job for your accountant, but being in control of your profit and resultant cashflow is an invaluable business skill.
Why is positive cashflow so important?
‘Cash is king!’ may be a cliche these days, but it’s a maxim which underpins any successful business model. Yes, it’s great to make a profit at year-end, but if you don’t look after your cashflow then the business may not survive as long as the end of the year.
What’s needed is good cashflow management to enhance your financial health. And without a careful eye on your cash numbers, things can quickly go awry.
A business can generate high revenues and big profits, but still be cashflow poor. In other words, it can have profits at the end of the period, but have very little liquid cash to fund it’s day-to-day operations over the course of the period.
Talk to us about improving your cashflow management
If you want your accountant to do a cashflow forecast ask yourself is this really what you need from them? Perhaps asking for support in improving cash collection and shortening the cash cycle for your business may bring better benefits.
Good cashflow management is all about being in control of your cash inflows (income you’re generating) and your cash outflows (what you’re spending). To achieve ‘positive cashflow’ you need to proactively work to keep your inflows higher than your outflows.
As your adviser, we can help look at key steps for keeping your revenues high, margins profitable and meeting your financial targets.
Get in touch to talk through your cashflow management.
Get in Touch
We love meeting new, exciting businesses. Get in touch with our team to see how we could enhance and protect your financial position.
Or if you’d prefer to speak to someone directly just give us a call on: 08000 664 664 or email: hello@wrpartners.co.uk.
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