Small businesses can experience serious cash-flow problems even when they appear to be growing. Increased sales do not always translate into money in the bank, particularly when customers delay payments, stock absorbs working capital, or the business takes on new expenses before receiving revenue. A recent Xero South Africa report highlighted the scale of the problem, finding that 91% of South African SMEs were affected by late payments, with invoices paid an average of 18 days late. Rapid growth can also put pressure on cash flow because businesses often need to spend more on stock, employees, equipment, premises, marketing and other operating costs before the additional income from growth is received. Experts therefore recommend that business owners regularly forecast their cash flow, closely monitor accounts receivable and avoid tying up too much money in inventory.

GUEST: Lerato Mathodlana, founder and editor of The Founder Brief

<p>Small businesses can experience serious cash-flow problems even when they appear to be growing. Increased sales do not always translate into money in the bank, particularly when customers delay payments, stock absorbs working capital, or the business takes on new expenses before receiving revenue. A recent Xero South Africa report highlighted the scale of the problem, finding that 91% of South African SMEs were affected by late payments, with invoices paid an average of 18 days late. Rapid growth can also put pressure on cash flow because businesses often need to spend more on stock, employees, equipment, premises, marketing and other operating costs before the additional income from growth is received. Experts therefore recommend that business owners regularly forecast their cash flow, closely monitor accounts receivable and avoid tying up too much money in inventory.</p>
<p>GUEST:&nbsp;Lerato&nbsp;Mathodlana, founder and editor of The Founder Brief</p>

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