One of the most important fundamentals to get your head around as a business owner is that profitability does not equate to having cash in the bank.

Your predicted cash flow is tracked in the Home area as well as the Balance Sheet and Operating Cash Flow Statement - you’ll know if you are predicted to have cash flow problems.

But, if you also see that your sales activity is looking healthy and you are predicted to be profitable you need to look at the cash impact view of your Profit & Loss.

This will immediately explain where the issue is:

Predicted cash in from sales

This view includes VAT/GST and is the prediction about when you will be paid for sales that you have generated - i.e. when cash is going to hit your bank.

Are you collecting cash from your customers too slowly or inefficiently? Look at the spikes in each account. Look at the spikes in your predictions.

You also have a view over when existing unpaid invoices from your accounting package are predicted to be paid. Is there something there that needs your attention? Check both invoices and bills.

If you need to take control of customer and supplier activity, activate Flow in your settings area. It will help you with what to do next.

Predicted cash out from spending

  • Just like predicted cash in from your sales activity, you need to check when you are predicted to spend money

  • There might be a deferred payment from government schemes or loans or an old bill that is still outstanding that you’ve forgotten about that is reducing the cash out position.

Understanding cash flow issues ahead of time will protect your business and your state of mind.

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