I started writing this blog with the idea of writing about the top 5 ways to improve your cash flow but the more I thought about it, it is not information that is needed, it is the motivation to action!
More businesses fail due to poor cash flow than poor profits which is why, if you google “cash flow”, numerous articles pop up that will provide ideas of how to improve cash flow. If a business is profitable but there is no cash to be able to meet obligations in the short term, the business will cease to exist. Cash is the top indicator of a healthy business. For this reason, it is important that management carefully monitor the inflows and outflows of cash and have a good understanding of what the cash flow drivers are.
Given that cash is the lifeblood of any business, why does cash flow continue to be an issue for so many businesses?
As a profitability and business growth advisor for over 20 years, in my opinion, here are the top reasons why cash flow is still an issue for most small businesses:
- Owners are too busy putting out day to day fires, dealing with quotes, dealing with customers, and finding good people.
- Information systems are not up to date or they are non-existent.
- The management of the business is not considered a priority by the owners.
- Owners don’t understand what impacts cash flow such as collections of receivables, appropriate financing of capital assets, timely invoicing for work done, and many more.
- Business owners fail to implement ideas and plans because they are afraid of change.
But consider this:
Imagine life without the stress of wondering if you can meet payroll. Imagine life where you always get paid because cash is available and the business is profitable. Imagine life where you can dream big about your business because the business is healthy and the banker is supportive of your expansions.
Now, let’s take some steps to change, so that you can get the results you want:
- Create time to work ON your business, not IN
- Educate yourself about cash management strategies
- Get help and advice to implement
At Davies & Associates, we have a different philosophy and approach. While our approach is not right for all businesses, the businesses that we do work often experience improved cash flow and increased profitability. Let us help your business thrive.