Cash Flow Analysis: The Accountant’s impact

Your accountant plays an important role in your business’ cash flow success. By this, I mean giving the accountant the full 360 of your business and working together to ensure that your business achieves its financial goals.

As an accountant working with various clients, I have realised that the more transparent our clients are; the better the process of increasing and growing a business’ cash flow gets.

As an accountant; I have once worked with a client who was ‘cash strapped’ to say the least and had no idea what was happening with his finances and how cash in their business was being used. This can be quite challenging, but because we required transparency and the client was willing to put in the work; we help him achieve his cash flow goals and grew his business’ cash flow drastically with impressive numbers.

This case shows us that seeing your accountant regularly is important and helps with getting things like VAT and PAYE registrations done on time, to avoid penalties that could land you/your business in trouble and certainly broke.

Through the processes of cash flow analysis, your accountant is supposed to keep you informed about your financials and what is happening with your cash flow at all times. This process also helps you understand the progress and where your business is going.

Now, what is a cash flow analysis and why is it important?

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A cash flow analysis measures how much cash is generated and spent by a business during a given period of time using a cash flow statement that assesses the business’ Operating cash flow, Cash flow of investment activities, Cash flow of financial activities and Net cash flow. This is the best measure of a company’s performance simply because:

It can be measured and compared. Cash is tangible, quantifiable and can be measured in standard units acceptable to anyone.

It’s difficult to fake. Many techniques can be used to inflate profits, to artificially increase the value of assets or to otherwise temporarily make a business look more successful than it is. However, it is very difficult to do the same with cash.

As I have mentioned before, a cash flow analysis and growth works both ways; it is between you and your accountant. For the success of the processes; there needs to be transparency from all parties involved and my advice is – be proactive, ask questions and get involved in all your businesses financial activities. Work with your professional account to get the best results for your business.

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