Cash Flow Solutions
elkcorp recognises that cash flow is the life blood of any business: if it dries up your business can fail, regardless of its prior success. That’s why securing and accelerating your cash flow is one of our most important objectives.
We all know cash flow is important. But as business owners we tend to focus on other things – sales, expenses and profitability. Often, we only pay attention to cash flow when something goes wrong – and by then it may be too late.
The cash flow cycle
Every dollar you invest goes through the cash flow cycle before it comes back to you, bringing some profit with it. The faster the cycle turns, the more successful your business will be.
Let’s say you buy $100,000 worth of stock and sell it at a 40% profit. When the account is paid, you receive $140,000 in cash. Then you have a choice:
- Reinvest the full $140,000 in your business and make another 40% on that. The more often you can do that, the more profit you can make
- Keep the same $100,000 investment cycling around your business and use the profit for other purposes. The faster the cycle turns, the less money you need to plough into your business
Cash flow warning signs
- You could be having cash flow problems if:
- Your suppliers regularly go unpaid for more than 60 days
- You have frequent disputes with suppliers or change suppliers regularly
- You often lodge BASs late
- Employee super payments are significantly in arrears
- Suppliers insist on cash-on-delivery
Keep your cash flow flowing
The reasons cash flow stops flowing usually fit into one of five key problems. The ideas and solutions below provide solutions to the top five problems, so that you can manage your business cash flow better.