Do You Have Enough Fuel to Finish the Race?
By Tina Zawila
If you watched Bathurst on the weekend, you saw a brutal reminder that being in front doesn’t necessarily mean you’re going to win.
Anton De Pasquale was leading the Bathurst 1000 on the final lap when his car ran out of fuel, allowing Brodie Kostecki to drive past and take the win. After 1,000kms of racing, it came down to one simple problem: there wasn’t enough fuel left to reach the finish line.
There’s a lesson in that for every business owner.
Cash is the fuel in your business.
You can have strong sales, plenty of work and even a healthy profit, but you still need cash to keep the business moving.
And when economic conditions get tougher, managing that fuel becomes even more important.
One of the first signs of pressure is often customers taking longer to pay. You may have made the sale and recorded the profit, but until the invoice is actually paid, that money isn’t available to pay wages, suppliers, tax, loan repayments or other commitments.
Meanwhile, your suppliers may be experiencing exactly the same pressures. They start following up outstanding accounts sooner and become less willing to extend payment terms.
Suddenly you’re caught in the middle: customers aren’t paying you, but everyone else expects you to pay them.
That’s how a profitable business can find itself facing a cash flow crisis.
In challenging conditions, it’s not enough to simply check the bank balance. Business owners need to look ahead. What cash should come in next week? What bills are coming up? What happens if a major customer pays two or three weeks late? Is there enough working capital to absorb the unexpected?
A cash flow forecast can help identify those pressure points early, when there are generally more options available to deal with them.
At Bathurst, having enough fuel for almost the entire race wasn’t enough.
And the same applies in business.
You don’t just need enough fuel to lead the race. You need enough fuel to finish it.
Call the professional team at UHY Haines Norton CQ on 4972 1300 for professional advice tailored to you.
