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Cash Flow Management | Business Advisory & Corporate Services
Chartered Accountant & Business Consultant - Meredith Harington

Cash Flow Management

“Cash is king in a recession!”  –  AMEinfo.com , Wednesday, 31 August 2005

“High oil prices, overvalued stock markets, overpriced real estate, rising interest rates, there is little point in investing in such a malign environment. The next step is surely an economic crisis and recession, yet nobody seems prepared to say what is blindingly obvious.”

In light of subsequent events, how profound was this 2005 article?

For the entrepreneur, "Cash is king" refers to the importance of cash flow for short term operations, purchases and acquisitions and for the survival of the business. A company could have a large amount of accounts receivable and inventory on its balance sheet which would increase equity, but at the same time could still be short of cash with which to pay wages.

Unless it is able to convert its accounts receivable and other current assets to cash quickly, it could fail and be commercially insolvent despite a positive net worth.

Our cash flow management advice can assist you to:

  • know when, where, and how your cash needs will occur;
  • know what the best sources are for meeting your additional cash needs;
  • be prepared to meet these needs when they occur, by keeping good relationships with bankers and other creditors.

The starting point for avoiding a cash crisis is to develop a cash flow projection. We can help you develop both short-term (weekly / monthly) cash flow projections to help you manage daily cash, and long-term projections to create the necessary capital strategy to meet your business needs.

We can then prepare historical cash flow statements to help you understand where all the money went.

An accurate cash flow projection is just one of the many cash management tools you will need. We can also assist in:

  • obtaining an appropriate line of credit;
  • adopting effective collection policies;
  • devising effective payment policies;
  • obtaining the maximum rate of return on your idle cash.

Managing your total cash flow cycle and not just monitoring the bank balance requires understanding and experience. Our experience of many different situations can help you to sleep at night.

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