We often hear the phrase “Cash is king” in the business world. Cash is the lifeblood of a business because a company must generate enough cash in order to survive.
Cash Flow management is one of the most important aspects of a business. A company’s cash flow is related to its operating, financing and investment activities. In other words, a healthy cash flow ensures that a business can cover expenses, repay investors, and have adequate funds for further growth and expansion.
So what are the implications of poor cash flow management for a business?
Failure. Business failure is the single greatest fear of any business owner. In fact, most businesses fail within the first 5 years of operation. According to Business Insider, a study done by the US Bank 82% of businesses fail as a result of poor cash management.
Bad decisions business owners make due to cash flow problems:
Poor pricing of products or services, which results in lower than optimum margins and profits, can lead to cash flow issues because lower profits result in inadequate funds or working capital needed to pay off expenses.
When businesses run low on cash, they tend to postpone hiring resulting in an understaffed business which ultimately negatively affects the quality and punctuality of services, further resulting in lower sales. This gives rise to a vicious feedback loop of spiraling profits.
When cash is tight, businesses spend less on investing activities out of fear. However, calculated financial risks and investments are essential to the expansion and growth of businesses. Thus short-term cash flow problems often cause business owners to make poor long-term financial decisions.
Safeguarding your Business
Cash Flow management can help ensure the survival and success of businesses by helping them avoid the all-too-frequently made mistakes mentioned above. Furthermore, cash flow management can not only ensure businesses have adequate cash in the present but also help forecast future cash flows which will in turn help you:
- Ensure there is adequate capital for the company’s growth
- Schedule and plan for new investments and equipment purchases
- Make informed decisions about debt and equity financing
- Predict slow inflow periods
- Track the growth of your company
- Add additional products or services
- Plan for taxes and emergency expenses
- Plan for hiring/firing
Make the Right Decisions
Are you now wondering how exactly you can manage your cash flow and ensure your business’s success?
We’ve got you!
Brightflow AI seamlessly integrates all your financial data to provide a simple, comprehensive, and automated platform to demystify finance. Brightflow AI integrates the 15 different confusing excel sheets into an easy to read dashboard with all your company’s financial information. It provides simple, easy, and real time analysis on cash flow from a business’ data. Brightflow AI is a personalized service that helps small businesses with their most important metric – cash!
|Why Brightflow AI?
According to a survey conducted on 393 small businesses, the biggest problem with hiring accountants for this job is that they are more reactive than proactive. Additionally, they fail to educate business owners about the state of their finances and provide guidance for the future. However, Brightflow AI tackles all of these issues head-on by providing business owners with foresight and proper guidance. Furthermore, Brightflow’s user-friendly tools make complicated financial metrics easy to understand and interpret for people without any financial background.
Brightflow AI uses your Amazon & Shopify sales and Quickbooks, Google Ads & Facebook Ads data to provide simple revenue & ad spend information and cash flow forecasting in real time. Most companies only check their cash flow at the end of every month, at which point most cash flow problems are much harder to fix. With our tool, companies are able to see the changes in their cash flow in real time, and Brightflow AI alerts business owners of any forthcoming cash flow problems in advance, before their cash flow management has spiraled out of control.