When the rules of the game change, the best path forward is to understand the new reality and adapt!
This is particularly important when it comes to cashflow management.
It is not about being pessimistic, for even in tight trading conditions, businesses can prosper and grow!
Rather, it is about understanding how the “game” is being played and adjusting.
For example, if you require finance, understanding the Lender landscape, who has an appetite for what, and the critical elements that need to be addressed, can greatly enhance the chances of getting the finance you need.
You need to know this BEFORE you apply for finance!
When you know reality, you can deal with it! When you don’t, you are hoping, and hope is a poor business strategy!
Real Time Information - The Key to Cashflow Management!
Without real time financial information, it is hard to make informed business decisions.
Historical financial information is evidence of past achievements and can be an indication of trends.
But trying to make critical business decisions based on data that is 6 or 12 months old can be a recipe for disaster!
Fortunately, today business owners can use accounting software, (Xero, QuickBooks etc in combination with Hubdoc, Receipt Bank etc) to access the information they need in real time and very cost effectively!
Whilst the past is important, cashflow management is about today and the future! (Tomorrow’s cashflow repays todays debt!)
Real time data is a great starting point!
A benefit of real time information is that it allows you to create projections (that have a solid foundation) to understand the likely cash needs of the business going forward.
Many businesses wait until a crisis occurs, (or there is an immediate cashflow need), to prepare financial projections. This is a mistake & poor cashflow management!
The best time to seek finance is well before you need it!
That said, projections are not just for the Banks – they are an essential and practical planning tool.
Whilst they will always be a “best guess” they allow business owners to plan and adjust strategies – to keep ahead of the game, instead of playing catch up!
Although trading conditions are challenging, accepting reality and making the adjustments needed is the best way to avoid cashflow problems.
It can also ensure you are well positioned to take full advantage of opportunities when they arise, as they invariably will!
Knowing where you stand, your negotiating power and leverage before seeking finance is critical!
It can provide peace of mind, better outcomes and free up headspace to focus on what is important – running your business!
If you are thinking about finance, or would like to learn more, call me on 0400 239 611