Businesses need cash to be able to pay staff on time, buy supplies, repay debts on time and to pay dividends etc. If you don’t have cash to pay a supplier when the payment is due, you might find you lose the trust of the supplier and the outlet AND they may declare your business insolvent.

Measuring the finances of your business is an essential part of managing the business and is a critical element of sound decision-making and future planning. Many business owners delegate the financial matters to other Directors or to their accountants and often cite that they “prefer to look after the sales function or the front line team.”

All too often business failure takes business owners by surprise. You can still have large contracts in place but suddenly the cash dries up and your cash flow resembles the Sahara!

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If we take a constructive look at why businesses fail we find one of the biggest reasons is overtrading. What does this mean? Well, when you think things are going great, you’ve getting lots of orders and contracts, you’re growing and growing and then suddenly it seems the business runs out of cash and you didn’t see that coming. Most businesses have a negative cash flow and if you have this you have very little room to manoeuvre and actually grow your business. Cash is king. I say it all the time.