Getting someone’s name wrong is a mistake we’ve all made at some time but there are some errors it’s really important to avoid. In business, getting your cash flow estimate wrong could have serious consequences, even resulting in your business closing its doors. These are the cash flow errors you really can’t afford to make.
Ignoring your budget
A mistake many business owners make is putting together their budget for the financial year ahead then putting it aside and forgetting about it. Your budget is like the road map guiding your business decisions and should be referred to regularly to ensure your enterprise stays on track to achieving your goals. When used in conjunction with your cash flow forecasts, your budget will help you ensure you have enough cash on hand to keep your business running.
Not having enough of a buffer
Expanding your business is great and is a sure sign of success but if you need to do so at the expense of your cash reserves, it can be a dangerous move. Make sure you have enough liquid assets on hand to provide a buffer against a downturn in business or other adverse event. Setting up alerts to notify you when your cash is getting low is a great way to manage this.
Having unrealistic expectations
We all like to dream big and think our business will be a roaring success from the start but the reality is that achieving and sustaining business growth takes time and a lot of work. Do some research into what your potential sales might be and look at a few different possible scenarios to get a more realistic idea of what your cash flow might look like.
Getting your cash flow projections right can mean the difference between business success and bankruptcy. By avoiding these mistakes and getting help from experts such as your bookkeeper and accountant, can make all the difference. If you need help with setting up your cash flow forecasts, get in touch. We’d love to help.
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