The a-z cash flow formula
Cash Flow is at the core of any business, large or small.
From managing your very first drawings right through to that first internal hire; timing is always key.
For a new venture, healthy cash reserves will help weather any early setbacks.
One of many ways you can achieve positive cash flow is setting a precedent for prompt payment of invoices – in some cases, offering incentives for doing so.
£15 million shared profit
£40 million turnover
The importance of cash flow in recruitment
Businesses of all sizes need to have a good handle on their cash flow otherwise they are unable to operate.
When a recruitment agency is initially starting out, the first months will prove crucial to its success. Owners and managers should ensure there is enough cash coming into the business to pay regular expenses to ensure operations run smoothly. This is often easier said than done, particularly when building up a client portfolio from scratch.
A more established firm might have a financial buffer to wait for invoices to be paid, but a start-up rarely has the same luxury. In order to survive, new recruitment firms should have safeguards to make sure cash flow does not become a problem.
Cash flow problems can be a consequence of over-spending, although it is also down to customers failing to pay on time or, in some cases, at all. For recruitment agencies that do not charge an upfront fee, the impact can be catastrophic.
Without liquidity, a firm cannot pay its staff and other expenses, and could face high bank charges, lost growth opportunities and even bankruptcy.
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