This is likely to be a particular problem during your first year when you are building up your business and don't have regular cash inflows. This means you have to make sure there is sufficient cash in your company's bank account for it to pay all its bills in the meantime – whether these relate to invoices from suppliers, employees' wages, rent, rates, tax, VAT or anything else.Įven if your business is profitable, there may be times when you are short of cash because you are awaiting payment for a large order. There will probably be a time lag between your business providing its goods or services and getting paid. You won't be able to stay in business, however, unless you have cash, hence the famous adage 'cash is king'. It's a simple principle, but one that can occasionally become lost amid dreams of building multinational empires worth millions of pounds. There are many well-documented cases of businesses failing not because they weren't profitable but due to poor cashflow management. You must be able to pay your bills while you await payment from your customers. ![]() Good cashflow management is critical to running a successful business. Many established, viable, and even profitable businesses fail due to cash not being available when they need it most. ![]() The needs of a business constantly change and your cashflow will highlight any shortfalls in cash that will need to be bridged. ![]() An introduction to professional insights.Virtual classroom support for learning partners.Becoming an ACCA Approved Learning Partner.
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