For any type of business, cash on hand is critical when running an enterprise. The truth is, you don’t have to be an entrepreneur to know that cash is the lifeblood of any business.

Why Cash Flow Management Is Important

Maintaining a healthy flow of cash is not as easy as it sounds. This is where the expertise of your Bookkeeper Melbourne comes in. It requires a delicate balance of keeping track of money in and money out. It is also important that money comes it at the right time as you will need it to pay debts and loans, pay contractors and workers, purchase supplies, or even buy a new equipment.

Cash Flow & Profit

Some people confuse cash flow as profit, when it fact any Bookkeeper Melbourne will point out the huge difference. While a business may appear profitable on paper, it may be suffering from negative cash flow. This typically happens when debtors are given 30 day credit. So while the Profit & Loss report may show an income for the given month, which may indicate profit, it may be also because the outstanding payables may have not been settled yet.

Cash Flow Budget

With the help of your Bookkeeper Melbourne, you will be able to prepare a cash flow budget, which provides you a projection of anticipated income and receipts as well as the outgoings and expenses.

The preparation of a cash flow budget is critical to any business. While it cannot assure 100% prediction, it will give you a good idea what to expect and base your financial decisions and plans accordingly.