LOSSES HAVE TO BE FINANCED - FACT
. Whilst profitability will ultimately lead to posit vie cash flow - albeit slowly - if your business is loosing money your cash flow WILL worsen - because losses have to be financed. When you lose money it is uncomfortable and it will get worse before it gets better....
Over the years we have seen three typical signs to look out for - besides the obvious profit and loss accounts showing a negative position. Whilst not exhaustive these are the principle signs we see over and again. :
- Deteriorating bank balance
- ATO arrears building
- Suppliers chasing you more regularly and harder
TIP 1: Have a look at your bank statements regularly - if you are seeing the trend of your bank balance is deteriorating (ie the credit balances falling or the debit balances rising) - these are warning signs.
TIP 2: Look at the ATO position - if the balance of the monies you owe the ATO is increasing and the staffing levels (including overtime) have remained constant - this is a further danger sign.
TIP 3: Are your suppliers chasing you for money more regularly - are you finding it harder to meet the regular supplier payments? Have some suppliers threatened to put you on stop?....all warning signs.
Whilst these are just three examples of the symptoms of losses, you can also tell a great deal by your own bank statements.
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