the happy days of fall! Aiden is now 3 years old so he can really enjoy
the changing seasons, pumpkin carving and raking leaves into piles
before jumping into them with all the gusto of a child. I look forward
to him enjoying the Thanksgiving holiday and, of course, the wonderment
of the Christmas season. I feel so blessed to have his unconditional
love greet me every day.|
On the business side, I hope you enjoy this month’s email. In it, we’re sharing information regarding an important aspects of your business: Cash Flow in your business.
| Small business owners have many demands placed upon them as they grow their businesses. And one of the most important responsibilities is to protect your cash flow at all times. |
Understanding the Role of Cash Flow in Your Business
The cash inflow of a business is the stream of income and expenses that alter the company’s cash account over a predetermined period of time. In most cases, it comes as a result of three drivers: Income from operations; Money received from equity investors; Funds produced through debt financing.
The cash outflow is a result of production or operating expenses, as well as investments or debt service.
The place where cash flow becomes risky in the flow itself, especially when it involves conflicts in the flow between cash disbursed and cash received. The purpose of an effective cash flow management plan is to ensure that the company is never lacking cash.
This has nothing to do with the profitability of the business, or the sales booked, or even cash in the bank at this moment.
Rather, it’s about managing both the unscheduled and scheduled inflows and outflows of cash so that it’s always within a safe range of predictability and manageability.
In many cases, a business wins a large contract, takes out a loan to cover personnel or capital to service the contract, then found itself with negative cash flow as a result of contractual delays or slow payments. And this can be disastrous, which will lead us into our our next email; why your business needs an emergency fund.
We’d like to take this opportunity to let you know how thankful we are for you and grateful for the trust you put in us. We hope you enjoyed a wonderful holiday with family and friends.