When you own a small business, managing cash flow is essential. That’s because cash flow is the lifeblood of any business—without it, you can’t pay bills, purchase supplies, or keep up with payroll. But what exactly is cash flow and how do you manage it? Read on to find out more.
What Is Cash Flow?
Simply put, cash flow is the movement of money in and out of your business over a period of time. You can think of it as the net effect of all financial transactions that occur within a certain amount of time—usually one month or one quarter. It’s important to keep track of this because it tells you how much money is actually coming in and going out.
How Do I Manage Cash Flow?
Managing your cash flow means understanding where your money comes from, where it goes, and how much you have left over each month (or quarter). This requires careful record-keeping and tracking of all income and expenses. It also means staying on top of payments to suppliers, vendors, creditors, employees, etc., so that you never miss a payment or incur late fees. Additionally, forecasting your future cash flow can be helpful in planning ahead for potential issues or opportunities.
Finally, don’t forget about taxes! As part of dealing with your cash flow effectively is to make sure that you are setting aside money for any taxes that need to be paid eg Corporation tax, VAT, PAYE or personal tax
Cash flow is an important part of running a successful business; without proper management strategies in place, it can quickly become overwhelming and difficult to stay afloat financially. By understanding what cash flow is and how to manage it properly—including tracking income and expenses carefully along with setting aside funds for taxes—you will be better positioned for success in the long run as an UK small business owner.