Cash flow is the lifeblood of every business. In fact, according to a recent U.S. business failures. Although seemingly counterintuitive, many experts putting cash flow management profits.
While profits are how a tree landscape-maintenance business a failure to manage the operation’s flow can mean running into problems one profitable accounting period not be able to offset. Another study, one by Intuit, revealed that 61% of businesses around the world struggle with cash flow, and 32% are unable to pay vendors, pay back pending loans, pay the owners or the employees cash-flow issues.
Cash-flow management 101In essence, cash flow is nothing more than the movement of money in and out of the tree care business. Cash flows into the business from sales of goods, products, or services. Money flows out of the business for supplies, raw materials, overhead, and salaries in the normal course of business.
An important key to improving the tree operation’s cash flow is often as simple delaying all outflows of cash as long as possible
An adequate cash flow means a steady flow of money into the business in time to be used to pay those bills.
More often than not, the operation’s cash inflows will lag behind its cash outflows, often leaving the business short of money. This shortage, or cash flow “gap,” represents an excessive outflow of cash that may not be covered by a cash inflow for weeks, months, or even years.
Properly managing the operation’s cash flow allows that cash-flow gap to be narrowed or closed completely before it reaches the crisis stage.