Benefits of positive cash flow
The key benefit of positive cash flow is that you have sufficient cash within the business to keep the momentum going and keep the company in good health. You are able to purchase the necessary resources, pay your creditors and pay your salaries without concern.
Being able to make timely repayments for any money owed will also have a positive effect on your credit rating in as future lenders will review your credit history to make sure repayments will be paid on time, and in the appropriate manner. Of course having a positive cash flow can eliminate or reduce the need for borrowings.
Positive cash flow also means you can allow for contingency funds for emergency situations, such as those resulting from natural disaster, or just running out of supplies. Having the extra cash flow to work with in these situations can make the difference between keeping your company in full operation and struggling.
The affects of positive cash flow also influences other companies you may want to trade with, who will regard you accordingly.
And of course, positive cash flow, especially a substantial amount of cash flow coming into your company, will enable you to expand your company, so that your business can grow exponentially.
The next article in this cash flow series looks at why you should avoid negative cash flow.
For information about how we can help you with managing your cash flow, go to our cash flow section and contact us on info@mgarnerconsulting.co.uk or ring us on 07885 525221.
