So what are the symptoms of failing to manage your cash flow?
- You’re struggling to pay your bills on time.
- You’re struggling to meet the wages bill each week or month, or to pay the rent.
- You’re forced to pay cash for new stock and supplies due to a poor past credit record.
- Some suppliers are paid earlier than they need to be.
- Customers are slow in paying you for work done or products sold.
- Your struggling to meet your tax requirements; PAYE, GST, or income tax.
- You’re leaving your invoicing until the end of the month to send out, thereby giving customers extra days of free credit.
- You have insufficient reserves to handle unexpected additional costs or expenses.
- Business growth is constrained by the fact that any extra resources needed, have to be paid in advance of extra revenues generated. Places extra pressure on existing funds, resources and reserves.
- Your management style is more reactive than proactive.
- You have too much stock and a need to off load quickly, usually at a discount.
- Your fixed costs are too high which limits your ability to react effectively to a downturn in revenues.
- Your margins and volumes suggest you simply aren’t covering your cost base.
While not exhaustive, the list is compelling enough to suggest a catalogue of faults in your cash and business management approach can quickly accentuate your cash flow problems, especially those of small businesses who generally have shallower pockets.