The pessimists have thus far this year been full of predictions regarding the state of the economy citing little or no growth. Thankfully not all prophesies are quite as conclusive as there are some great opportunities for all businesses over the coming twelve month which could benefit growth in real terms.
As cash flow continues to be problematic for most businesses, making decisions of where to invest and adapting strategies accordingly remains debatable. Perhaps it is timely to rationalise the methods of managing the whole financial structure and adapting the processes as the business grows.
It will be necessary to identify areas of growth and demand and it is only when the picture becomes much clearer that businesses will be able to identify where there is a need for a change of strategy or further investment.
In today’s economic environment, where access to liquidity is restricted, cash management becomes critical to survival as the effect of cash flow is real, immediate and, if mismanaged, totally unforgiving. Cash needs to be monitored, protected, controlled and put to work.
Good cash management has a double benefit in that it can help a business to avoid the debilitating downside of a cash crises and it can grant a commercial edge in all business transactions. For example, businesses with the ability to boldly manage their inventory may need less working capital and have the ability to extend more competitive credit terms than their rivals.
A great strategy for growth is pointless unless the cash is in place to realise that strategy. Indeed, a good understanding of what is meant by a cash low is required in order to prevent a business overspending at the wrong time and will prevent the business getting into difficulties. Timing is all important to move a business forward.
Cash flow is a particularly difficult area for all small businesses as finance is by far the largest driver of growth. It is time for a whole new approach to financial management by adopting a think outside the box mentality to allow business expansion and profitability this year.