C & W Partners Chartered Accountants

Similarly, fast growth businesses often find themselves under pressure to manage cash flow. Rapid growth and the extra demands it places on working capital put the business under pressure.  Cash flow management is important; you need to understand your cash flow cycle, the demands of extra trading stock, the impact of increasing debtors and the effect and timing of your basic operating costs.  A good cash flow forecast is essential for any well run business. 

Important as it is, the question remains, is cash flow management enough? The answer is No.
Unless your cash flow forecasts are accompanied by a capital management plan you aren't in control of your business. 

Capital management starts by identifying how much capital the business needs and how much is being provided by the owners. The reality is that your business is only funded from capital, debt and retained profits.  In the early days of the business, there are no retained profits so it comes down to capital debt. 

From the start there is a continuing requirement for capital management. This is about understanding: 

• The initial requirements of the business 
•  Additional capital that will be required to fund growth 
• The timing and amount required to replace or upgrade capital equipment
• Taxation requirements
• The expectations, stated or otherwise,of the shareholders for access to profits