Cash is still king


Keep your eye on the ball when it comes to cash flow

Cash is still king

The recent collapse of Conviviality, the owner of the Bargain Booze and Wine Rack chains, is a stark reminder of the importance of cash flow to all businesses, regardless of their size. How could a listed company with an annual turnover of £1.5 billion with a business at one point valued at £500 million be sunk by a £30 million ‘unexpected’ tax bill? Although there is no doubt more to this story than meets the eye, there are important lessons that can be drawn from the sorry saga that are applicable to all businesses.

Most small businesses, especially start-ups, are aware of the importance of cash flow. Cash, the most liquid form of working capital, is the lifeblood of a business. Growing a business is exciting and will pay off in the long run as long as you keep a close eye on cash and have fallback plans, for example additional finance options, to cover unexpected events.

Sensible cash flow forecasting and planning alone won’t protect your business if underlying record-keeping and accounting are inadequate. Even the most advanced models and forecasts are only as good as the data on which they are based. In Conviviality’s case, it appears that the accuracy of data was the main problem - relying on the manual update of a cell in a spreadsheet to identifying the upcoming tax bill.

At Cow-Shed Website Design we work with many small businesses in the Guildford and Surrey area to design and develop high quality websites as a key part of developing business and brand awareness and generating sales. We firmly believe that a good website is the foundation of an effective digital marketing strategy, but we recognise that many businesses are looking for support in other important areas including overall business strategy, working capital management and financing and web-based accounting solutions. Feel free to contact us at contact@cow-shed.com to find out how we can help your business.