Forecast report: Cash flow vs net profit

While most people tend to focus on net profit as the most important financial figure for a business, it is actually cashflow which is absolutely critical to ensure the business runs smoothly.  As Richard Branson says, “never take your eyes off the cash flow because it’s the life blood of business”. 

Cash is king and even profitable businesses can fail because of poor cashflow. 

Xero reports that 9 in 10 small businesses experience at least one month of negative cash flow each year, and the average small business is cash flow negative for 30% of the year.  These figures underline why cashflow is so important and a significant challenge for small businesses.

You might find yourself needing bank finance to make up for the gaps in cashflow, which will impact profits too in the long run.  Your suppliers might need payment before you have the funds available.  Your customers may be taking too long to pay.  Your overheads could be too high. 

Or are your gross profit margins too low?

There are various tools we have available to improve the cashflow of your business, and small changes can make quite significant differences to your cashflow, so please let us know if you need assistance with your business cashflow and we can work alongside you.