In the current climate in which we are all living it’s never been more important to be sure that your business is prepared for the unknown. To do this you need to ensure that your cash flow is nice and healthy in order to get through the otherside.
The main mistake businesses make is looking at their profit line and assuming that this means the business has a healthy cash flow. This simply isn’t always the case. A healthy cash flow means you always have a decent amount of money in your bank account just in case the unexpected should happen, that you are allowing for contingencies and this won’t leave you short.
The best way to plan ahead is with cash flow forecasting. At Pinnacle Advisory Services we can use your historical bookkeeping data to forecast the future of your business finances. Together we can go through these reports and make changes within your business to improve your cash flow. Having an insight into the direction your business is heading will allow you to make better business decisions. We can set out goals for your business and put the necessary steps in place to make them more realistic and achievable for you. By monitoring this on a regular basis it means we can review and amend the goal posts accordingly.
If you don’t include this planning as part of your business routine then you could well be one of 99% of businesses who fail in their first year or one of 80% who don’t survive their first 5 years.
Being consistent with monitoring your transactions can make a huge difference to the success of your business. Finding things which aren’t quite right can be nipped in the bud early so that they don’t have a knock on effect. When things go unnoticed in business, this is when things can go very wrong. You may think by watching what you spend you will be just fine, but all it takes is to lose one client, or a big client to not pay you on time.
Doing your bookkeeping on at least a weekly if not monthly basis is critical. This will give you a true picture of your current financial position. Using cloud accounting just like we do to monitor your transactions means you have access to real time data, 24 hours a day 7 days a week, from wherever you have an internet connection.
Get a better understanding of your cash cycle, be aware of what comes in and out of your account and at what times during the month cash flow gets a bit low. You may be able to make simple changes to ensure cash flow is more steady throughout the month.Being wise with your bookkeeping will future proof your success.
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