The survival of a small business is reliant on having enough cash flow to cover additional expenses and prepare for unforeseen events. Many businesses struggle every month, between the time they invoice customers and the time they are paid, and a shortfall of funds can cripple expansion plans or even break a business.
Without sufficient cash flow, a business is operating in a risky fashion regardless of profit margins. The difficulties are also increased when outside forces play their inevitable role, such as occurs during economic volatility, times of low consumer confidence, or a high Australian dollar. Many thousands of businesses become insolvent every year, and while it’s expected that not everyone will be a success, good money management could help to save those who may otherwise be tottering on the edge of insolvency.