The Importance of Cash Flow

Cash Flow is the lifeblood of every business. You can have all the ‘Profit’ in the world but if you don’t have any Cash Flow it can be as inhibitive to your business as having no profit. Lack of Cash Flow can prevent you from purchasing items for sale at discounts, prevent you from purchasing needed Plant, Delivery or Office Equipment that is necessary for running your business. It can also prohibit you from seeking opportunities to grow your business. Throughout your software are tools to assist you with keeping up with your Cash Flow.

              ♦ Current Ratio (Current Assets Divided by Current Liabilities)

               ♦ Quick Ratio (Current Assets less Inventory, divided by Current Liabilities)

               ♦ Net Working Capital Ratio (Current Assets minus Current Liabilities, divided by Total Assets)

Beware of a higher than expected utilization percentage as well. It too can be an indicator of issues as a result of staffing issues, such as needing more staff or a change in the assignment of duties for current staff.

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