All too often the shortage of readily available cash in a business is not recognized or accepted until a catastrophic event materializes.  Usually at this point the business owner becomes focused on resolving the problem, switches to ‘firefighting mode' and hopes to rescue a failing situation.

The above circumstances can be found in:
1. Profitable organizations
2. Unprofitable businesses
3. Rapid growing businesses

Sales orders may be growing, profits may be increasing but if the business cash flow is not adequately managed the long term future of the business may be in doubt.

The catalyst may be:
1. Unpaid creditors demanding payment
2. Loan repayments missed
3. Debtors late in settling
and so on that give rise to a realization that a lack of Working Capital exists.

How does a business owner avoid a lack of cash?

There are several actions that can be taken and these include:
1. Be proactive
2. Measure, review and act upon the Key Performance indicators (KPI), which should include cash flow.
3. Manage the business
4. Undertake a business review
5. Develop the business goals and strategies to achieve the goals
6. Prepare a business plan and financial forecasts
7. Communicate the plans to stakeholders and ensure all understand and accept their role in avoiding a shortage of cash in the business.