Beware the ides of March: getting a head start on effective cash flow management

Leave a comment   Published in: ,    on January 7, 2014   by Justin Ward

We hope you’ve had a pleasant and relaxing break, and that you’re recharged and ready for 2014.

A new year offers the chance to do things differently. In a business context, it can be an opportunity to try new strategies and address lingering challenges.

But in developing a plan for improvement, some business owners and advisers may not know exactly where to begin. We suggest you start this year by examining how well you’re managing cash flow.

Effective cash flow is the lifeblood of a business. If you or your clients are struggling to manage the flow of funds in and out of the business, it could be a warning sign of distress.

Here’s a scenario that we’ve observed. In late December, many business owners frantically send invoices to arrive at debtors just before Christmas. However, these bills are unlikely to be paid until well into the New Year. At the same time, January and February are often quiet months in terms of sales.

But as cash inflows slow, the need to pay bills and meet liabilities continues. This situation may plant the seeds of cash flow issues that could emerge as soon as March, and result in owners having to deal with creditors rather than the business.

So, in looking to a prosperous 2014, how can you or your clients better manage cash flow?

First, make sure you’re producing detailed cash flow forecasts. This will help you better understand when and where potential cash shortfalls could occur.

Second, be strict on payment terms. As the New Year begins, make sure accounts teams are chasing up debtors and identifying problem cases.

Third, keep a close eye on cash flow. With today’s technology – particularly cloud-based accounting solutions such as Xero – it’s easier than ever to stay across what’s happening in a business.

At Macleay Partners, we have extensive experience in helping our clients manage their cash flow challenges. If you’re currently wrestling with these issues, we’d be happy to discuss how we can help. Please contact Macleay Partners Director Justin Ward at

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