Cash Is King!
Our clients often ask us for help with managing their cashflow. A statement of cashflow is one of the three key financial statements that tracks all the money flowing in and out of your business.
The cashflow statement acts as a bridge between the income statement and balance sheet by showing how money moved in and out of the business.
There are three sections to a cash flow statement:
- Cash Flow from Operating Activities – this is cash earned or spent in the course of regular business activity—the main way your business makes money, by selling products or services.
- Cash Flow from Investing Activities – this is cash earned or spent from investments your company makes, such as purchasing equipment or investing in other companies.
- Cash Flow from Financing Activities – this is cash earned or spent in the course of financing your company with loans, or equity injections.
Analysing Your Cashflow
We can analyse your cashflow statement to retrospectively find payment cycles or seasonal trends when you need additional cash for payments. This can help you plan ahead and make sure you always have money to cover payments.
We can also identify if your business is in a position to invest in capital, pay down debt, or increase the dividend. This can help you decide if you actually have the money to spend now or if the cash showing is actually needed to fund your business over the next period ahead.
How to Improve Cashflow
There are some simple steps you can take to help improve your cashflow and the cash you have available in your business to cover operating expenses or planned investments, including:
- Review your debtor collection policy by ensuring you have a strong policy in place for collecting debts.
- Push creditor payments out until they are due -paying just before the due date maintains cash flow without missing out on early payment discounts.
Xero Cashflow Statements
You can monitor your cashflow at any time by selecting the Cashflow Statement in the Reports suite of your Xero account.
If you require a cashflow forecast, Rural Accountants can assist by creating one using the Spotlight reporting tool.
Remember: Cash is King!
As a farmer, Christine understands our business and how farmers and growers operate.
We use Rural Accountants to provide a full accounting service to an orcharding partnership which operates a number of orchards with a wide spread of varieties and management systems. Rural Accountants are always timely and accurate, and their annual financial accounts are extremely easy to understand and very grower-friendly.
Rural Accountants is a real asset to our business.
The team at Rural Accountants pretty much manage all our administrative tasks for the group including payroll and tax planning, ensuring we don’t pay any more than necessary. They are at the forefront of technology and have helped us get up and running with Xero and Figured which is much more efficient than the way we used to work.
Christine is very knowledgeable, great to deal with and knows our business well. She is also a sheep & beef farmer so knows the industry really well and understands our needs.
Rural Accountants keeps us on track through strategic and forward planning meetings throughout the year. Christine knows our business inside out so she can deal with our questions instantly.
What Our Customers Think
I used to work out my GST and process it manually which would take me at least a full day every two months. Angelina then set up reconcilliations rules and other quick tools, and showed me how to do all my reconcilliations and process my GST returns through Xero which now takes me no time at all!