Cash is King in Opportunity or Adversity

Cash is King in Opportunity or Adversity

The phrase in business “Cash is King” often refers to the importance of cash flow or the cash reserves of a business. So why is this important for your business? Well, the answer will either lie in opportunity or adversity!

Let’s start with opportunity. If an opportunity presents to expand your business, maybe a different line or simply taking on a new contract, you will likely need extra cash for initial expenses or working capital for wages. There are also likely to be operational expenses whilst you are waiting for new revenues to kick in. As we all know, revenue and expenditure do not usually hit the bank account at the same time.

Alternatively, you may have some adverse event such as a bad month’s trading or a debtor that does not pay, is tardy with payments, or some other event. Your staff still need to be paid and other operational costs need to be met.

What’s the solution?

Often business owners think they are doing the right thing by paying cash for motor vehicles and other larger ticket business-related assets. Whilst this can be a saving, it takes to cash out of the business and effectively pays for these assets on day one, instead of paying for them over their useful life.

Financing assets such as motor vehicles and other plant and equipment can preserve cash in the business for either an opportunity or an adverse event. Financing for these assets means your business can retain cash for either event. Remember, the worst time to ask a bank for a loan is when you really need it!

Financing of business assets can be a reasonably straightforward and cost-effective process. Much easier than when you really need the money.

So talk to one of our Business Specialists on 08 9381 8311 who can help you with a financing strategy or put you on the right track to obtaining finance for your asset purchases and allowing your business cash for when you really need it.