Cash Flow Management


Sydney SMSF accounting

Cash flow is the money that is moving (flowing) in and out of your business in a month. Although it does seem sometimes that cash flow only goes one way - out of the business - it does flow both ways. 

  • Cash flow in the business is a very important term. It can go out of your business or it can be inside your business. If in any business customer is buying the products and paying you the money then the cash flow to the company is considered as positive. Same way if the business is utilizing the money for maintenance or any other use the cash are going negative.
  • Cash is going out of your business in the form of payments for expenses, like rent or a mortgage, in monthly loan payments, and in payments for taxes and other accounts payable.

Think of 'cash flow' as a picture of your business checking account. If more money is coming in than is going out, you are in a "positive cash flow" situation and you have enough to pay your bills. If more cash is going out than coming in, you are in danger of being overdrawn, and you will need to find money to cover your overdrafts. This is why new businesses typically need working capital, in the form of a loan or line of credit, to cover shortages in cash flow.

Why Cash Flow is So Important?

The negative cash flow in the business should have some limit. If it is crossing the danger line of limit then it can be huge financial loss to the firm. This can cause the business to shut down as well. So we recommend to plan well manage cash flow.

We La Verne Capital Strongly recommend you work under our experienced and qualified financial adviser who can help you to find all of your problem solution.

La Verne Capital T/as SMSF PRO AFSL License Number 482 937 and ABN : 20 609 554 485