The professional opinion: business cash flow

Over the last couple of months we have surveyed a large body of accountants and financial professionals to get their two cents on how small businesses view, manage and support their cash flow.

The reason we believe accountants and business finance professionals are the best source for this information is because they are hands on, work with a wide variety of businesses, have a clear picture of processes, tools and best practices related to business finances.

The results from the survey show a unanimous attitude from professionals towards the cash flow needs and management practices that exists for businesses.

Business cash flow habits

The results here speak for themselves as all our surveyed accountants emphasised the importance of cash flow to business success.

Ok, that is common knowledge. What is more interesting is what this means for businesses. We all know cash is king. How do you go about creating good processes that ensure your business can best ensure a healthy and sustainable cash flow.

As is evident, rigorous discipline is required in order to stay on top of your business' cash position. This will give you a clear picture of which parts of your business you can improve and how you can go about it. The best way to review your cash flow position will be by consolidating your cash flow forecast with your accounts receivables, your accounts payable and your bank statement.

Just reviewing your cash flow position and then putting aside is not the way to proceed. This much is clear since...

“100% of our surveyed accountants stressed that understanding your business’ cash flow position was vitally important in supporting strategic business decisions."

James Sherwin-Smith, Growth Street CEO
Improving your cash flow visibility

How do you comply with what our surveyed accountants say are best practices? It may seem time consuming, but the value added by implementing the necessary processes will allow you to make up for the initial setup exertion. 

As is clear from the data below accountants are predominantly both keen and willing to provide cash flow forecasts and consolidate forecast with actuals - to see how accurate the forecast is - if they are requested to do so

Requesting a cash flow forecast is easy, which means it's an easy way to create tangible benefits to your business strategy. Running a business is not only about total income versus total outgoings, it's about the timing of the parts that make up the total numbers on either side.

Not every business has an accountant. If you are looking to get started with creating your own forecast, download a monthlyweekly or daily forecast template by clicking the links. One key thing to note is that a cashflow forecast doesn't have to span 12 months (who knows what's gonna happen in 12 months?!). However, a daily or weekly forecast stretching 2-3 months ahead will give you a lot of the benefits mentioned above.

  • Increasing the visibility of your business' cashflow position will allow you to...
  • Tackle the pressing problems to optimise your cash flow
  • Make it clear which parts of the business is thriving/troubling
  • Improve the timing of your business operations and
  • Highlight when you might need external finance.

The importance of cashflow to a business' success, highlighted by accountants, coupled with the tangible benefits to the operations and optimisation of your business makes for a compelling endorsement of cashflow forecasting. All the more important, it can indicate when your business' finances will be squeezed so you can prepare by finding a suitable finance solution.

Written on in Business Insights