It is a fantastic position to be in – your company is growing around you, your team are energised, the feedback from customers is getting better and better and revenue is on the up…life is great – but there are dangers out there for growing businesses.

The greatest achilles heel facing many business owners experiencing growth is managing their financial positions, particularly their cash flow. It is a sad reality that most businesses fail not because of their products, marketing or leadership, but because they do not have control over their cash flow and simply run out of money. As the saying goes, ‘revenue is vanity, cash flow is sanity’; no business can survive long without the cash to meet its everyday needs.

Given the importance of cash management it would be logical to assume that companies would have clear cash flow forecasts in place which show them where they can expect to be over the short and medium term. The plan would also have contingencies in place should problems arise.

The reality is that such planning and forecasting is often absent and as consequence the business failure statistics are depressingly high. As well as cash flow planning it is important that companies have very practical steps in place to help achieve these plans – this could involve managing your debtors (people that owe you money), managing your stock levels so you don’t tie up cash unnecessarily and having access to reserve funds (perhaps an approved overdraft).

At Your Finance Team we can work through your cash planning with you to give you peace of mind and take the burden off your shoulders. Email us or call us on 01737 652 221.