The Accounting Activity your business should be performing

I am not going to keep you waiting. The #1 accounting activity your company must perform is cash flow management. This activity is so overlooked by businesses that it is scary. The fact is lack or or improper cash flow management can lead to death of your business. It may sound dramatic but numbers don’t lie. 68% of small businesses perform no cash flow analysis at all. This results in many successful, growing and profitable businesses failing because they do not have adequate cash to meet the needs of their growing business. 

Research from stasticsbrain.com shows that 46% of businesses failure is largely due to financial reasons.Simplycashflow.com stated that 28% percent of small businesses states “cash flow as their biggest challenge.”Businesses who have cash management actives have a 80% greater chance of surviving, compared to 36% chance if you manage your cash yearly. So know that you have the numbers, let’s learn more about what cash flow management entails. Cash flow is the movement of money in and out of the business. Therefore, cash flow management is tracking, analyzing, and monitoring this movement on a continuous basis. This can be daily, weekly, or monthly. 

Cash flow management can be very detailed and involved. The purpose of this post is not to teach you cash management (because to do it correctly it will take way more than a blog post) but to get your wheels turning. I want you to assess your current cash management activities and come up with a plan to improve it. 

Payroll accountants is one of the most important part of your business. Contact us for payroll services in Birmingham and much more.

Ask yourself

Do I completely understand how to manage cash? What cash flow management activities am I currently doing? How often do I take time to effectively monitor and manage cash? What is the difference between profit and cash flow? I recommend reading the book Never Run out of Cash. It is a great book on how to manage your cash flow especially if you are not an accountant.