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Cash flow management: A key to business success

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On 23rd of September, Tailored Accounts co-organised a breakfast seminar with Jigsaw Accounting and Taxation Services and Chamberlains Law Firm. The event was designed for business owners and covered three much needed topics including cash flow management, tax strategies round-up, and managing, securing and recovering debt. 

Tailored Accounts’ Executive Director, Harry Hoang, attended the event as a speaker. As an experienced accountant and also a business owner, Harry understands thoroughly any accounting issues a business owner has to face. Harry shared that of many issues, effective cash flow management is the key to the ultimate success of a business. Thus, cash flow management is the major speaking point.  

Here are a few key questions Harry addressed during his speech.

1. How much is actual cash balance in all of your accounts and how long it would last if:

  • You don’t make any more sales?
  • You want to hire a sale person but are not sure if you could survive until he starts making sale?
  • You won a big project but you need to pay material upfront and hire more staff?

2. What is current liability and non-current liability and where is the safe harbour?

  • How much do you need to save each month to pay ATO and Super?
  • What is minimum cash balance to maintain office expenses, salary and other running costs?

3. How much is sitting in collectible and how it impacts the cash flow and movement?

  • List of debtors and what is possibility of losing them
  • Date that we expect them to pay and how that impact our day to day business operation

4. How much is sitting in creditors including bills that you likely to receive within 4 weeks?

  • Are we able to pay creditors when they fall due?
  • What happen if we don’t have enough cash to pay a big bill, what can we do?

5. Budget vs Actual: What happen if we expected to have $50k cash balance in December 2015 but we only get to $30k balance, what action that we need to take?

If you are looking for solutions for similar situations, we are happy to offer a free consultation with our certified accountants and bookkeepers.