Cash flow is the lifeblood of all businesses

Cash flow is the lifeblood of all businesses and accordingly this must enjoy a first priority in any management team. The basic cash flow rules are;

  1. Always ensure there is cash

Running out of cash will result in business failure. If the business does not generate enough cash then borrow if possible. Note your cash flow projections must include repaying any loan taken.

  1. Cash Is King.

Manage it as it is very unforgiving if you do not. It keeps the business alive.

  1. 3. Know Your Cash Balance.

Always know your cash balance and most importantly it is not the balance what is shown on your bank statement. Even the most experienced person will fail if they are making business decisions using inaccurate or incomplete cash balances.

  1. 4. The bank balance is not the cash

The true cash balance is that which is in your books. Bank and cash balance are two different things. They are rarely the same.

  1. 5. If not you get someone else

A true cash balance can only be obtained by keeping your cash book right up to date. If you cannot do it or have the time get someone else. Remember know your cash balance.

  1. 6. Cash forecasting

Financial people  use a 13 week rolling cash forecast. Even with the cash difficult to predict,t it is amazing how a 13 week forecast identifies pinch points. This is a start of managing your business and not being managed by it.

  1. 7. Have cash flow projections and planning

Plan your weekly and monthly cash flow in and outs. Weekly planning allows you to talk to suppliers helping you over pinch points.

  1. 8. Cash flow problems do not just happen

Many SME owners are surprised when hitting a cash flow problem because they failed to anticipate and plan to deal with it. Always do your projections working from up to date and accurate data. The surprise will then be how relitavely easily it was to get through the pinch point.

  1. 9. Use expertise

Not all SME owners are comfortable with figures or have the time. Bookkeepers often are well capable but get real expertise to help or oversee. Wrong information will lead to wrong decisions.

Once managing your cash flow you can concentrate on your customers who are the cash generators in the business. Focus your talents on them and through cash management reduce the worries cash flow may give.

Should you want or need more help in cash flow planning and/or forecasting then call;

Richard Terhorst at 08450095360 or E-Mail at



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