How cash flow affects the growth of your business

The number one issue facing small business is ensuring adequate cash flow from operations, according to 83% of survey respondents. Cash flow is the movement of cash in and out of a business. Out flow of cash involves writing checks for salaries, suppliers or creditors; inflow on the other hand is the cash received from lenders, creditors and customers. Many areas of your business can be affected by the availability of cash.

Do not focus on profit but on cash flow. Many businesses fail a few months after starting, they might have been profitable but they lacked good cash flow to survive. After your business becomes profitable, you still need to manage cash flow. You have reached another stage of your business life.

Keep accurate and timely accounting records to help you understand your financial position in the business. Statements such as the balance sheet, monthly income are vital in keeping track of cash flow in your business.

Record changes in your business concerning cash, from purchase of any product or service to sale of the product.

Managing cash flow in business enables you to keep up with payment of any debts you might have. Loans require monthly payments, which can restrict cash flow thus interfering with the money meant for investment in you company. Follow up on accounts, have good credit policies to keep cash flowing in.

Good cash flow allows you to invest in growth, allowing your company to operate in an organized proactive way. You will be able to invest in new technology, provide training for personal development to your team and purchase more assets that can improve your business.

Good cash flow gives your business flexibility when responding to dilemmas and makes your business more appealing to the lender in case you are in need of a loan at some point.

Learn to monitor stock and infrastructure used in your business to maintain productive levels, because they can tie up cash and increase storage and insurance costs.

As your business is growing you need to increase income at some point, review pricing, improve customer care and advertise more.

Reduce unnecessary costs such as power and water bills and members of your team that are not productive.

Every entrepreneur should possess adequate financial skills or seek the services of professional accountants and financial advisers to help them learn more about good cash flow practices.