Accurately reporting cash flow is a key priority in business

When you're running a business, keeping a careful eye on your cash flow should always be one of your top priorities. You don't just need to know how many sales you've made – you also need specific details on when your customers will complete their transactions and put actual physical cash in your hands. After all, it's only at this point you can turn around and invest in the future of your business.

For this reason, one of your key goals in business development should be to put together cash flow forecasts that are clear, accurate and up to date. If you have an accurate projection of how much money you'll have and when, you can use this information to plan effectively for everything that lies ahead.

What goes into a cash flow statement?

Keeping an eye on cash flowing in and out is a fundamental part of handling wealth management for any business. According to the Queensland Government business and industry portal, it's important to put together statements on both your past cash flow and future projections. These should include three distinct sections – cash flow from operations, financing and investment.

Once you've put all these sections together, the crucial figure to key in on is your company's total net cash flow. Once you add everything up, are you taking in more cash then you're sending out? If the answer is no, it might be time to rethink some things about your business.

Know when it's time to take another look at your business practices.

How you can improve your situation

If you're looking at your cash flow statements and it's clear the status quo isn't good enough, then now's the time to make some changes internally. According to Smart Company, one key step in this regard is to speed up your collection cycle. If you're currently requiring that debts are paid within 60 days, can you consider tightening that up to 30? It would probably make a world of difference.

Making changes like this requires communicating them well so all the new rules are enforced correctly. You have to be perfectly clear about your company's new payment terms, both externally with clients and internally as you discuss financial matters with your company's chartered accountants.

If you don't have such accountants on your team already, you may want to consider bringing them on board. A knowledgeable business development consultant in the office to help you weigh financial decisions can be an invaluable asset. Talk to our experts at Wilson Porter today about precisely what sort of development advice you need.