The 3 biggest challenges to your business cash flow are:
1. Slow paying customers
One of the biggest killers to your business cash flow is slow paying customers. It is great to have lots of customers, however, if they are not paying you on time (or at all), that will make it very difficult for you to pay your bills. Your employees, subcontractors and suppliers must all be paid on time, but if your customers aren’t paying you, where is the money going to come from?
2. The ATO
The second silent killer is your commitments to the ATO. Depending on the size of your business, you will have to pay the ATO for your GST and PAYG obligations either monthly or quarterly. Many business owners still continue to overlook this critical obligation. Whether that is because they don’t want to admit they owe anything to the ATO or simply over commit their funds elsewhere, this is a problem. After your workers, the ATO should be your top financial priority. It is one organisation that you do not want to get on the wrong side of.
3. Over committing expenditure
The third silent killer is over committing expenditure. The way you manage your stock of materials is important. The vast majority of material supplies are readily available and therefore there should be no reason to buy extra ‘just in case’. The same goes for equipment. While we tend to want to have every piece of equipment that we could possibly ever need, that is not a sensible approach, particularly if there are certain items that would just end up sitting in the warehouse gathering dust. In addition to that, we tend to want the best of everything, and sometimes just because ‘the other guys have one’. Neither of these are smart business decisions.