Cash is the Killer

Most businesses, large and small, judge their performance on the health of their profit and loss account, but it's cash flow that is the killer. And it's cash that needs more attention, for it's lack of available cash that finishes off most businesses. How many fail because they suddenly discover they can't pay the wages or critical bills and no-one is going to lend them any more? Cash management is critical, and should have much greater urgency than most businesses give it. Why don't they? Because it is a pain in the neck to compile cash flow forecasts, particularly for busy SME managers. Forecasting seems like stab in the dark, when business doesn't necessarily generate a predictable income. But it must be done and it will be worth it. To follow up on your cash flow you need to chase up your invoicing. Amazing how many companies just let this slide. If you don't chase up, regardless of your terms of credit stated on your invoices, your debtors will not hurry to pay, especially the bigger companies. You need credit control systems, regularly following up, politely but persistently requesting payment. On the flip side you must measure your paying out of bills, checking your cash balance against urgency of specific bills and being hard-nosed about which creditors are more important to you. Remember, cash is unforgiving, and, unless you nurture it, will be your undoing.