Cash flow is the total amount of money being transferred in and out of a business. It is the difference in amount of cash available at the beginning of a period (opening balance) and the amount at the end of that period (closing balance).
A positive level of cash flow must be maintained in order to stay in business. Cash and profit are not the same thing.
The main reason why small businesses fail is because of poor cash flow management although a lot of them are profitable they run out of money and are therefore unable to pay their staff, suppliers or interest on bank loans and repayments.
It is crucial to keep track of your cash flow in order to identify how your business is performing before small issues become major problems.
At 2 Peas we can help you manage your Cash Flow so that you can maintain longevity in your business or train you how to do it successfully.
Cash reserves are absolutely essential to business survival, and now more that ever during the COVID-19 crisis.
This is a long video – around 45 minutes. It takes you through some important issues to think about when doing cashflow forecasts and helps you work out what the minimum amount of cash is that you need to hold. It shows you how to use a spreadsheet to calculate your cash position in the future and how to use it to help you make decisions. It also shows you briefly a cashflow forecasting software that makes the process much simpler.
You can download the spreadsheet referred to in the video below.
Do you need to make decisions about your business and avoid problems that may be looming? Use cashflow forecasts to work out what impact various decisions will have on your bank balance. Especially useful during the COVID-19 outbreak when businesses will come under cash pressure and may need to make really important decisions about what to do.
We show you how to use a spreadsheet to create a cashflow forecast.