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3 reasons why cash flow is important to businesses in south africa

3 reasons why cash flow is important to businesses in south africa

18 Aug 2022

Businesses should always keep close attention to their cash flow, profits, and petty cash to stay above the water. All three of these factors are extremely important but there are differences between them that are useful to know so that you as a business owner can make informed decisions regarding your business operations.

1. It takes care of Business Relationships

One of the most common problems businesses experiences when running out of cash flow is that they become incapable to pay their suppliers. When this happens, you can only imagine how damaging this would be to the relationship between you and your suppliers as business partners. Even worse, harm your business’s reputation in the industry.

You must work with a plan so that you do not face multiple and/or big payments staring you in the face without the funds to deal with them.

2. Creates business expansion opportunities

Growing and expanding your business means that you partake in new markets, new staff members, and increasing revenue. Exciting, isn’t it?

Timing is an extremely important factor to keep in mind. If you expand your business at the wrong time or in the wrong way things are more likely to wrong in the long term.

When considering expanding your business you need to make sure your business has enough cash in its pockets. Increasing the number of employees, renting bigger or more buildings, and increasing your stock purchases will all start consuming more cash before your business has made more money. It’s easy to say that if your business does not have the capital for these expenses, it will cause clear problems. Making use of financing solutions is always a fast and effective way to make sure you have adequate funds for expansion.

3. Enable yourself to make Decisions and Plans

Being able to know how much funds your business has at its disposal at any given time requires updated and accurate cash flow statements. Having this accurate information support plans and decisions is a vital part of healthy business operations. On the other side if you do not manage your cash flow carefully, then you could be making the wrong decisions that put you, your employees, and your entire business at risk.

No matter how good you feel about your business’s position if your cash flow shows there is not coming in enough money you are not doing that well. If this happens you should investigate possible problems that you might be experiencing. For instance, you might not have issued enough invoices to clients. Whatever the reason might be, having an updated cash flow statement will reflect the true buying position your business is in at any given moment in time and allows the owner to hold back on making purchases at the wrong time.

I think by this time it’s clear as to how important cash flow is to any business. CorpFin can ensure that you don’t miss out on that next high-yielding opportunity by providing your business with the cash flow it needs. Apply for a short-term asset backed loan through CorpFin today!

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CorpFin offers businesses and entrepreneurs essential short-term financing (three to nine months) to unlock potentially high-yielding opportunities not typically supported by traditional finance institutions.

CorpFin acts as an intermediary between investors and clients by linking financial opportunities to willing private investor capital. We do not finance cash flow, but rather growth opportunities to established, profitable enterprises.

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