Why cash flow is King (or Queen)

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Why cash flow is King (or Queen)

Why Cashflow is King

You can call cashflow king. Or you can call cashflow queen, if you favour equality (and don’t we all). Whatever title you prefer there’s no doubt that, when it comes to business success, cashflow reigns supreme and creating a cash flow model is essential. Steady cashflow is the heart ofyour business that keeps its lifeblood pumping. Restricted cashflow is the cholesterol that can block the arteries of your business – possibly permanently.

Enter Finstro – a holistic cashflow management and debtor management platform that seamlessly integrates with your cloud accounting system to help you manage your cashflow and keep those arteries pumping and the king (or queen) sitting comfortably on the throne where he or she belongs.

In fact, more businesses fail due to lack of cashflow than due to lack of profit. Without steady cashflow, your suppliers may stop extending you credit and you might not be able to purchase the goods needed to sell to your customers and receive payment. Restricted cashflow limits your growth as you cannot take up new opportunities, build up stock or take on extra staff when needed. In short, lack of cashflow can choke your business growth and lead to more stress than you ever thought possible.

It’s important to note here that there are three common ways businesses struggle or fail due to lack of cashflow:

 

  • The business has grown quickly and requires cash on hand within the business to purchase larger quantities of supplies or pay bigger wage bills, putting a strain on the business’s cashflow.
  • Customer payments take longer and longer to collect, so that whilst sales are growing and supply requirements are growing, the cashflow for those sales doesn’t come in for days, weeks or even months after it was needed.
  • The business owner has failed to anticipate a cash shortage, leading to a cash crisis and suspension or cessation of operations, even though the business has ample customers.

Finstro's Innovative Line of Credit has been designed to address these concerns, offering three separate solutions within a single product:

Finstro Pay | Supplier Finance

Finstro Fund | Debtor Finance

Finstro Cash | Cash Advance 

To avoid these mistakes, you should be completely realistic and honest when preparing your cashflow model. If you are not doing cashflow projections on a regular basis, it is worth using a cashflow projection worksheet and entering your current cash in hand (your liquidity), anticipated inflows (money coming in) and anticipated outflows (money going out). At all times err on the conservative side by estimating your inflows lower and sooner and outflows lower and later.

If you can see a cash shortage looming, Finstro’s readily available credit system can head it off at the pass, and avoid damaging your credit, losing suppliers, cutting back on staff or, worst of all, going out of business.

Another way Finstro can help you maintain cashflow is with our debtor management platform. A key factor of your cashflow is how long it takes customers to pay you. Our customised automated reminders can significantly reduce delays in payment as well as the valuable time you or your staff spend chasing up debtors. This is time you can use on far better pursuits, such as winning new business, or collaborating more closely with your team, rather than tearing your hair out.

Understanding and effectively managing your cashflow and being realistic with your cashflow model is essential to your business success. With healthy cashflow, you can build your business and have the flexibility to take new opportunities that are presented to you as well as knowing you have the ability to survive lean times. Want to maximise your cashflow? Sign up now for our free trial.

At Finstro, we know that cashflow is indeed king (or queen) and have the tools to help you generate healthy cashflow and plan your business better and more effectively. Find out just how helpful we are by signing up for a 30-day free trial today.