Accountant's Minute 211
Accountants can play a very important role in assisting clients to source one of the key components of the life-cycle of a business – “cash”!
In “Scaling Up” Verne Harnish identified that “having plenty of cash to weather the storms” was one of the four lifecycles of a business.
As businesses grow, they normally require more money.
As your clients’ businesses grow it is desirable that some forward planning is undertaken to get an appreciation of the amount of cash that is going to be required over the next 2 - 3 years to fund the growth in the client’s business.
This will require the development of Budgets and Cash Flow Forecasts for the next 3 years taking into account the likely trends within the business that have been identified as part of a Differentiated Strategy Review. (Accountants Minute 207)
Businesses require cash to fund extra expenditure that is normally required in working capital components of a business – inventory, debtors, work in progress. In some businesses there will be an offset for the increase in amounts owing to creditors but unfortunately in most businesses the amount owing by debtors will exceed the amount that is owing to creditors.
There can be other significant cash outlays required as a business grows relative to:
In the forward planning consideration needs to be given to:
Proactive accountants/advisers can assist business operators in this very important financing consideration for their businesses and in assisting those businesses to become “investment ready”.
ESS BIZTOOLS is presenting a Complimentary Webinar – “Cash” a Vital Ingredient! on Tuesday, 15 October 2019 at 11:30 AM AEST/12:30 PM AEDT. To register click here.
If you require any additional information on the services provided by ESS BIZTOOLS to assist your Accounting/Business Advisory Firm to deliver a range of Business Improvement Services which will contribute to your clients’ business success, please do not hesitate to contact us:
Have a great day!
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Episode 211 - “Cash” – A Vital Ingredient!
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