Covid-19 - No better time than now for Cash Flows and Budgets
Now is more important than ever to have a cashflow or set an annual budget for your business. There is no better time than now to slash overheads and think up new avenues of income streams.
What is a cashflow you ask? A cashflow shows the money flowing in and out of your business in each calendar month, the virtual movement of money, representing the operating activities of your business. A cashflow is where you can forecast ahead and measure the value and situation to see what changes may be needed so you can make better decisions.
The funds that come in are from your clients/customers that purchase your services or products.
The funds going out are for your expenses, loan payments, tax and any other types of payments you make monthly.
In effect, if you have more money coming in than going out, you will have a positive cashflow, but if more funds are going out than coming in, this is a negative cash flow and you will need to find funds to cover the extra going out.
Lack of funds is one the biggest reasons that SME’s fail and dealing with cashflow issues is difficult, especially if you don’t understand your cashflow or not looking at it monthly and analysing the short falls. There could be areas you can change repayments to assist the cash flow, or look at a temporary loan to cover a period where the cashflow is short.