Smarter Money Management = better cashflow

The problems with cashflow is that you only know when you have cashflow problems when you can’t pay for something.

It is entirely reactionary for most entrepreneurs but the super successful know their cashflow well enough before the trouble starts.

Knowing where you are is the first step but then being able to know where you will be is the diamond in the coalsack.

This article has been created to give you the tools to be able to predict and manage your cashflow.

Be smart and you’ll reap the rewards of excess cash.

Ignore the warning signs and you’ll be sleeping less, feeling stressed and worrying about how to pay your staff and suppliers.

If you bury your head in the sand and make like an emu, then the only course of action will be a CVA or administration – and it’s only failed entrepreneurs that face this situation.

The trouble starts and can be seen when your debtors slip beyond your payment terms. Typically the first time you’ll really notice this is when invoices aren’t paid with 60 days after the month end in which you invoice.

This is because of the way that most financial reports run and also because the average payment term is 45 days. So most invoices drop into 30-60 days in your Aged Receivables Reports but you only notice the older ones (that will cause you cashflow issues) when the report is ran the following month and these debts drop into the 60-90 day column.

That’s when the alarm bells start to ring.

But more often that not that is too late.

Don’t worry though, you’re not alone.

Over half of British Businesses wait for 60 days for a customer (or client) to pay them.1