YOUR SUCCESS LTD, 54 Montgomery Square, Nelson 7010
How To Keep Your Cash Flowing

How to keep your cash flowing

How long will the cash take to flow into my business?

The concept in the diagram indicates the number of days between paying for your inventory/goods until the cash comes back into your bank account – on a good day this will be 90 days however it could be longer if you do not monitor several key areas of your business.

Do you know where your cash is? The two main culprits that can be holding your cash are debtors and stock. A common issue is too many outstanding debtors, with business owners too scared to ask clients for their money, in fear of upsetting them. Another common issue is overstocking. Business owners want to cut costs by buying in bulk, couldn’t pass up a special from a supplier, or buy stock that does not move quickly enough. Often this is reactionary and not planned.

Planning will take into account the business cycle (e.g. summer/winter) and other predicted highs and lows for the year. These variances may impact your accounts receivable, inventory or accounts payable levels. The plan will indicate the changes in the levels of these items and what effect it will have on your cash and that means your cash flow projections will indicate when cash shortages will arise. These fund requirements should be discussed with your financiers so they can be ready to assist you.

Planning your annual cash flow is critically important because it:

  • forces you to think through your business plans for the year
  • provides a guide against which you can compare your actual cash flows
  • tests your business plans to ensure you will produce enough income to meet all your cash needs
  • projects how much operating credit you will need and projects when loans can be repaid
  • helps you communicate your business plans and credit needs to your bank.

We all hear that you need to speCash flownd more time working on your business and not in it, and this is one of the areas that you need to be working on. Spend tim
e understanding the financial side of your business.  Analyse and understand your cash flow and make the necessary changes now to ensure you don’t run out of cash. Don’t be one of those business owners who only looks for help or looks at improving internal processes when things go wrong. Be proactive, not reactive!


So, you need help with understanding the cash flow of your business call Gilbert or Paul on 546 9871 or email Gilbert at

Leave a Reply

Your email address will not be published. Required fields are marked *

Back To Top