top of page


A very common situation for business owners when they look at their company is to think: I am generating revenue, but my cash balance is not going up, where is my money going?

Your capacity to transform business activity into cash is key. This will allow you to finance your operations, repay your debt or distribute profits to shareholders.

Entrepreneurs often think about Cash Flow as the balance in their bank account. Let’s take a step back & clarify what Cash Flow actually means. When considering cash flow, we need to think about how money circulates in our business. Having a clear understanding of this will give you visibility of where your money is going. This will ultimately allow you to make better decisions for your business.

Many service providers will feel that their business is performing well. They are showing up, they have the clients, services are being delivered but…they don’t see their cash balances rise. This can feel counterintuitive and demoralising. However, there are a few simple steps to make sure cash flows are in line with performance:

  1. Make sure you bill your clients. Believe it or not, business owners often miss out on sending an invoice to the client as they are so focused on service delivery. This may sound obvious but I am 100% sure that this will have happened to all business owners at the beginning of their journey. Remember, without an invoice why would you get paid?

  2. Know what invoices are due. Having a follow-up process is as important as invoicing your clients. We should know what’s outstanding at any point in time. It can be easy for unpaid invoices to slip through the cracks if we are not keeping track.

  3. Understanding your cash requirements is vital. Summarise your recurring payments whether they be monthly/quarterly/yearly. If you understand the timing of business expenditures, you are well on the way to effective cash management. Knowing what needs to be paid & when will give you a feeling of control over your finances.

  4. The cash conversion cycle. How many days does it take to settle your payables versus clients settling your invoices? Problems arise when we are quicker to pay our suppliers than customers are to pay us. The more aligned your client’s payments are with when you pay your suppliers, the better your cash position will become.

To Consider: How long is your cash conversion cycle? On average, how many days does it take you to pay & be paid? Do you feel this helps or harms your cash position?

The Cash Flow Statement

The Cash Flow statement will map all the cash inflows and outflows from your business. We do this by looking at 3 common business activities:

  • Operating activities

  • Investments

  • Financial Activities

Categorising cashflows and understanding the different activities will be a lightbulb moment. Without question once you understand where your money is going, you will be able to make better informed decisions for your business.

To consider: Would you say cash flows from operating activities have increased or decreased compared to prior year?

Cash Flow Management & Analysis

While the Cash Flow statement collects past data, it is vital to look to the future so we can make proactive decisions.

A Cash Flow Forecast is an important tool when it comes to recognising liquidity bottlenecks at an early stage. It will show managers and business owners whether they will have enough cash available to cover costs in the coming periods or if they will have a cash surplus, which can be used to invest in further business growth.

In short, Cash Flow is a key business performance indicator and forecasting will allow you to maximise your business performance. Some of the benefits are:

  1. You won’t run out of cash!

  2. You can pay your team & suppliers on time.

  3. You can avoid overspending.

  4. You can grow your business.

  5. You will have peace of mind.

To consider: What is your expected cash balance in 6 months’ time?

Cashflow management can make or break a business. If you don’t know where to start, wait no further. Contact us and we will take care of it.


bottom of page