Poor Cashflow Planning Causes Business Failures
April 6th, 2009
Lack of cashflow forecasting is the single largest problem small businesses face. National Bank specialist business manager John Eaden says not enough businesses map out their expected cashflow. This affects their potential survival in a challenging economic climate. He says businesses only planning once a year have a 36% survival rate over five-years. This contrasts with those planning monthly which have an 80% survival rate.
Amazingly 70% of businesses which go bankrupt are profitable when they close their doors. A common misconception about cashflow problems is growth will fix it, but this often leads to more cash pressures, especially if companies discounted to boost turnover. Monitoring of cashflow is also crucial. Many companies only do it over a six-week time frame. They should double this to 10 or 12 weeks.
Copyright © The Main Report Group
