Around 60% of small business owners say that cash flow has been a problem for their business and with 89% of them saying these problems have had a negative impact on their business.īy balancing your inflows and outflows of cash, you can ensure the smooth day-to-day running of your business, at the same time as building sufficient reserves to weather peaks and troughs in sales, late invoice payments, or unexpected expenses. Yet, cash flow is a common challenge among small businesses. Why is cash flow important?Ĭash flow is important because it enables you to meet your existing financial obligations as well as plan for the future. If more money comes into your account than goes out, your cash flow is positive. Think of cash flow as a picture of your bank account over time. Cash flow definitionĬash flow refers to the incomings and outgoings of cash that represent the operating activities of your business. In this article, we explain why cash flow is the essence of any business. Understanding your cash flow and its importance will help you manage your accounts and ensure you always have enough funds available to pay your bills and grow your business. Even if you’re taking in lots of sales, you can still find yourself cash-strapped if the money from those sales doesn’t reach your bank account in time to meet your monthly obligations.
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