Since I became a practicing accountant my biggest and most challenging aspect regarding clients are Cashflow! The constant question and most difficult question to answer is: The income statement is showing I make money, but where is it? It’s not in my bank account. This is confusing them and then doubt sets in in the competency of the accountant. Clients also have the mindset of: ‘I will pay this bill after my client pays me’. Cashflow seems to be the answer when you’re caught between failure and success.

During my apprenticeship my superior told me that an insolvent business can survive with enough cash flow, but a healthy business can’t survive without it. This made me think and plan for cashflow!

In my opinion a lack of cash flow is, in a big portion, a result of a lack of planning or budgeting based on actual results in the past. Budgeting based on actual results in the past is a feature in cloud-based accounting software like QuickBooks Online. Yes, I know that you can’t plan for a sudden economic downslope, but you can still foresee any issues and start planning to counter it. According to the US Business Administration seven out of the top ten reasons why businesses fail is due to poor cash flow management. Read more on Accounting Weekly