Cash flow, or more specifically sufficient cash flow, is vital for any business. Sufficient cash flow means you’re green and growing. Insufficient cash flow, either temporary or sustained, can and will impact your business negatively and put pressure on the business owners. Here’s my top 6 reasons cash flow is important.

Cash flow is important for small businesses for the following reasons:

  1. It allows for the timely payment of bills and expenses: Without adequate cash flow, small businesses may struggle to pay their bills and expenses on time, which can lead to late fees, penalties, and damage to their credit score.
  2. It enables the purchase of inventory and equipment: A healthy cash flow allows small businesses to purchase the inventory and equipment they need to operate and grow their business.
  3. It facilitates the hiring of employees: Small businesses need cash flow to pay their employees, and a lack of cash flow can make it difficult to attract and retain talented workers.
  4. It provides a cushion for unexpected events: A strong cash flow provides a cushion that can help small businesses weather unexpected events, such as economic downturns or unexpected expenses.
  5. It facilitates growth and expansion: A healthy cash flow allows small businesses to invest in growth and expansion opportunities, such as expanding into new markets or launching new products or services.
  6. It helps to maintain a good credit score: A good cash flow can help small businesses maintain a good credit score, which is important for accessing financing and other forms of capital in the future.

In short, cash flow is the lifeblood of a small business, as it enables the business to meet its financial obligations, invest in growth and expansion, and maintain a good credit score. Without adequate cash flow, small businesses may struggle to survive and grow.

As a starting point, know what your monthly operating costs are and have a war chest available to cover at least 3 months of operating expenses. That might be cash in bank, or access to working capital when you need it. Please contact us to find out how working with us will have a positive impact upon your business.