Is bad cash flow keeping you awake at night?
It is common to see profitable businesses struggle with cash flow difficulties. Small Business owners need to understand the ebbs and flows of their business and plan ahead.
The ideal situation for a business owner is to be able to pay all suppliers by due dates. Fall behind and the grapevine always seems to spread faster with bad news. A bad reputation for paying bills has many repercussions including difficulty in obtaining supplies and can also lead to a downturn in customers.
It's common that many small businesses fail during their infancy. This is due to new business owners spending cash flow without planning for future liabilities including Tax, GST, PAYG Withholding and Superannuation commitments.
It is often the second year in business that hurts most as you can get through the first year without paying any income tax. But when it catches up, it catches up two fold as you will be required to pay your prior years tax in full, and start paying instalments toward the year you are currently in.
The key is to understand and manage your cash flow, and budget!
For assistance in the area of cash flow – get in touch with your accountant! Many see accounting fees as an additional cost of operating their business, rather than seeing it as an investment in your business reaching its full potential