We entrepreneurs are doing business in a changed time. First corona, now the war of aggression in Ukraine. Whether you are a newly founded start-up or an established medium-sized company - good cash flow or Cash flow planning has never been so essential for survival. Here are the reasons!
1. reduce insolvency risk
Statistics show: Over 80 % of all insolvencies are due to a lack of cash flow planning
If the ratio of incoming and outgoing payments is no longer correct, there is a quick threat of insolvency. Many companies underestimate the problem, for example by concentrating too much on the evaluations of the tax advisor or using inadequate tools in financial planning.
2. transparency instead of flying blind
The fact is: Financial data is complex, but it doesn't have to be
A look at the economic evaluation or the bank account alone are often not very meaningful. Smart cash flow or Cash flow planning records every cash movement in the company and presents the data both in detail (down to the level of individual postings) and clearly (e.g. in diagrams, tables and dashboards). But above all, the evaluations are always up-to-date and you don't have to wait for the tax consultant or the end of the month.
3. detect payment bottlenecks more quickly
Do you know the financial heartbeat of your company?
Now monitor changes in cash holdings seamlessly, analyze seasonal fluctuations in your business model, and observe your customers' payment behavior. Cash flow planning makes it possible to predict payment bottlenecks earlier and take measures to secure liquidity more quickly.
4. increase cash balance
Good Cash flow planning makes itself felt in hard cash
Decisive advantages are
- Better receivables management
- Optimized payment behavior towards suppliers
- More scope for investments, reserves and withdrawals
5. plan finances reliably into the future
How will the cash balance develop in the next 6, 12 or 24 months?
Plan into the financial future based on past cash flow and make better business decisions
- Planning of incoming and outgoing payments
- Create different scenarios
- Downstream target/actual comparison
6. convince banks and investors
You want to convince partners of your business idea?
Or talk to your bank about new financing? A good cash flow or Cash flow plan report makes your financial situation transparent and highlights risks and opportunities. This creates trust and convinces your partners of your company more quickly.
7. take finances into your own hands
Rely on others for financial planning? Not a good idea ...
Tax consultants and others take on important tasks when it comes to accounting and annual financial statements - but you should take forward-looking planning, e.g. integrated financial planning or solid cash flow planning, into your own hands. While large companies have already been doing this for years, there is a great need for action here for medium-sized businesses.
Photo by Ian Taylor on Unsplash
