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CASH FLOW Add to toolbox

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Cash Flow  - the figure that business owners worry about the most; the amount of money coming into and out of the business, the revenue from sales and the expenditures of the business.

These cash inflows and outflows can be split into 3 categories:

  • Operating - sales and business expenditures
  • Investing - asset sales and purchases
  • Financing – loan payments

A useful way to keep track of this money is by creating a cash flow statement and making projections based on previous performance.

You may have heard of the phrase in business: “CASH IS KING!” – this is absolutely true when it comes to CASH FLOW.

The reason it is so important:

  • Enables you to pay important bills and pay for supplies that you need in order to keep providing your product/service
  • Careful cash flow management means there is less need to go through the hassle of raising more money for daily running of the business
  • A healthy cash flow figure means you can offer a smaller share of your company to potential investor groups when seeking investment.
  • Allows you to plan for months that may be tougher financially.

 

 

So many small businesses go out of business within their first year, due to underestimating their cash flows.

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