Do you go with the (cash) flow?

Are you struggling to keep your business afloat upon the river of a demanding and competitive marketplace? It may be because you’re struggling against the current instead of going with the (cash) flow.


Deshika Moodley, now a Compliance Analyst who develops compliance packs for Sage Accounting online software, used to manage and report on the cash flow for Sage Intelligence, and with her many years of experience, she explains why getting a handle on your cash flow is essential for the survival and success of your business. “Forecasting and managing your cash flow will assist you in accurate budgeting, ensuring that you always have your finger on the pulse of your business,” she says.

Sink or swim

For small to medium-sized companies, how you manage your cash is especially important because your startup capital may not be enough to run the day-to-day expenses of your business, and so you would need to forecast and plan for cash coming in and going out as accurately as possible, says Deshika. She continues explaining that without doing so, you place yourself at risk of manning a sinking ship, as the decisions you make will not necessarily be based on accurate financial data. “Without accurately managing your cash flow, the ability to pay your suppliers timeously will also certainly be at risk. This could taint the relationships you have with them and damage your purchasing power going forward,” she adds.

Paying your suppliers on time is just as important as generating sales for your business, which is another area where accurate cash flow management plays a key role. Deshika explains, “The main focus in any business is to generate sales and income, and therefore the receipts of those sales are essential to determining how your business is doing.” Knowing and understanding what your business’s income is and where it comes from allows you to determine what you have in the bank to spend. And that is the basis of managing your cash flow.

Getting a handle on your business’s cash flow

The best method of managing your cash is to first ensure that you have a budget set up, advises Deshika. “This budget can be zero-based, or based on prior year’s budget/actual amounts,” she says. From this budget, you can then draw up a cash flow forecast. “It’s wise to use a pessimistic basis for your forecasting. For example, if your credit terms are COD, it would be best to assume that your customer would pay within 30 days,” she adds.

Deshika used Sage Intelligence Reporting to manage and report on the cash flow for Sage Intelligence, of which she said, “By using Sage Intelligence Reporting, I was able to manage the business’s cash flow at a glance with quick and easy-to-understand statement of cash flow reports.” Being able to drill down into the detail of the cash that came in and went out of the business, per activity or category, assisted Deshika in helping Sage Intelligence make more informed business decisions. “Being able to plan for your sales receipts and supplier payments is a very powerful weapon to have in the battle of making a success of your business,” concludes Deshika.


Deshika’s three-paddle approach for going with the (cash) flow

  • Ensure your cash balances are updated on a regular basis
  • Implement strict payment terms for your customers
  • Negotiate extended payments terms with your suppliers