How to grow your business without cash flow problems.
One of the biggest drivers behind business failure in the UK is cash flow problems. Couple this with fast growth and you could be heading for a disaster.
Many businesses see a cash balance in their bank that’s quite healthy, they start to grow their client base, they invest in labour, raw materials, plant and machinery to fulfil all the orders and before you know it that cash balance is low, and the worry starts about how you are going to pay those new employees to deliver what’s been promised to those clients before they pay you.
So, to summarise - fast growth sounds like the dream, but it can cause:
Increased unexpected overheads (staff, premises, equipment)
Delayed client payments (directly impacting your cash flow)
Higher tax liabilities (that without planning can catch you off guard)
The answer is to have a clear cash flow process in your business as part of the plan before you start to gather pace – or as soon as possible thereafter.
Have a cash flow that looks 6 – 12 months ahead, and regularly review it.
Improve payments terms from your clients – can they pay in advance? Or incentive early payments? Or have a strong credit control function.
Control the spend – it's so easy to get carried away on the wave of investing for growth but some spend its best done only when absolutely necessary so really keep control of this.
If you are beginning to grow or looking to scale and you don’t have a view of your next 12 months cash – book a call with us today.
