According to accounting definition, cash flow is the difference in amount of cash available at the beginning of the period available and at the end of period. It’s negative if closing balance is not higher than opening balance, else positive. The statement of cash flow is pillar of your company. Cash inflow states money used by company and cash outflow states where company spends money.
5 Common Cash Flow problem to avoid in your startup
Jack Welch said “If I had to run a company on three measures, those measures would be customer satisfaction, employee satisfaction and cash flow.”
Poor cash flow is one of the reason why one out of four businesses fail.
According to accounting definition, cash flow is the difference in amount of cash available at the beginning of the period available and at the end of period. It’s negative if closing balance is not higher than opening balance, else positive. The statement of cash flow is pillar of your company. Cash inflow states money used by company and cash outflow states where company spends money.
Cash flow is unlike net income, cash flow is amount of money left in your company’s account after repaying debt and lease obligations. Unlike net-income which eliminates non cash item.
Books aren’t organized
Unorganized book keeping is fatal for your startup. Some people don’t understand how important book keeping is until trouble times come. Don’t ever put books aside and always try to put on top of your priority list and do maintain your accounting system and keep it up to date. You can also use financial apps.
Bad Debts
Bad debts are amount that cannot be recovered. One must be careful of proper credit control system to avoid bad debts. They can be very harmful for your business. If your company is good at book keeping record then proper credit control system can be very straight forward.
Profit Issues
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