Few principles are more important to the survival of your business than cash flow management. Cash flow is the amount of money flowing into and out of your business in a specific window of time, and cash flow management is the process of tracking this flow and ensuring that you have enough cash on hand to pay expenses and earn a profit.
At Elias Aziz-Lavi CPA, we offer cash flow management for small- and medium-sized businesses, advising you on the best strategies to help your business prosper.
The Importance of Good Cash Flow Management
In some ways, cash flow is even more important than profit. Profit is necessary for a business to grow, but your business is not making profit if your cash flow is negative.
For example, you may have made enough sales in a month to make a profit in theory, but if the cash from those sales is not available and your expenses come due, you will find yourself with negative cash flow. In the long run, a business can’t survive under these conditions because you will soon find your accounts empty.
Achieving a positive cash flow, in which your business is earning more money in income than it is losing in expenditures, is necessary for your business’ long-term survival and prosperity. Fortunately, there are many tools and tactics to improve your cash flow.
Improving Your Cash Flow
You can improve your cash flow by making it easier to collect receivables, making sure the cash or checks owed by your customers are processed more quickly by your bank. You can also work to increase sales, though keep in mind that increasing sales on its own won’t help your cash flow if you are paying more to convert those sales than you are earning from the sale itself.
Elias Aziz-Lavi CPA can advise you on the best course of action to improve your cash flow, using whatever tactics work best for your business model and services. Contact us if you are in need of cash flow management in the Los Angeles metro area.