The Art of Cashflow | ABC Business

The Art of Cashflow

Industries: All

The art of managing cash flow is often something that seems straight forward or easy to plan on paper – but quite different in reality. Organisations both large and small will attest; success often comes the hard way, with the need for years of experience within your business or industry. 

One common mistake is to confuse cash flow with your cash position. Having cash on hand is critical, but your cash flow management is about projecting your ability to generate cash in the future – the lifeblood of any business.

Whilst everyone has heard the mantra “cash is king” - what does that really mean for you and your business?

To be successful it means the correct organisation and planning.

The first step is always to set your cash baseline, taking into account what cash you have in hand, or the money you have invested in your business, as well as loans you have received.

Next you have to accurately determine your expected cash sources, broken down and phased per month. Seasonality within business is one of the major risks for cash flow management.

Imagine being a florist and projecting cash flow for sales that spike only a few times per year (another reason to buy flowers more often). Looking at historical performance is always a useful guide to any major cash flow trends.

Lastly, you will need to assess your monthly expenses. This can be somewhat complex, particularly if you have started a new business and need to take account of things like one-time start-up expenses. Items such as incorporation fees, legal and accounting, licences and permits, construction or remodelling, can easily be overlooked in the excitement of starting a new business.

As a guide, regular monthly expenses should always include rent or mortgage payments, insurance, working capital, marketing, travel, utilities, taxes and of course payroll!







The biggest challenge facing every business person is getting their head around the numbers. This can be said for even the most hardened business veterans, and is a much bigger task for those starting out on a new business venture.

The latest accounting softwares available today could give you regular and up to the minute financial reports that accurately reflect the size of the prize or opportunity within your business. This information is critical to your planning.

An experienced accountant can also help you avoid common traps, such as determining the correct return on investment, or whether the business in question can provide you with an appropriate return. Other calculations such as business sales and profit projections are also well worth the discussion, as the information can provide good insight into how these numbers work in relation to your current financial position. 

The most critical element about planning the cash flow of your business is ensuring that it is an honest and objective process. With the passion and hard work it requires running a business day to day, having an objective source of information and insight is critical for any business.

By accurately forecasting cash flow, your business is in a much more stable position, with greater buying power, as well as having greater protection against bad debts. Strong cash flow provides the comfort and capabilities a business needs to invest in growth, in such items such as research and development or marketing.

Whilst cash flow management can be daunting in any business, the important thing is that you have the correct information and advice on hand to help you with the process. 

Haven Chartered Accountants is a wholly New Zealand owned and operated firm specialising in the accounting needs of small to medium businesses. 

For more information contact 0800 700 699 or email office@ 


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