Cash flow is the lifeblood of any business, but it is also something many companies are struggling with, at least according to the latest report from Bibby Financial Services.
The study found that cash flow has become trickier for companies to manage, with 40 per cent reporting it is harder for them to maintain cash flow than it was a year ago.
To produce an accurate insight into how a company is performing, Bibby’s index calculates the current cash flow and forward predictions of businesses to work out a composite score. In March, the score reached -3.3, significantly down on the +5.3 score recorded in February 2014.
However, this score is still a considerable improvement on results from later in 2014 with the index previously reaching -5.8 in July last year.
For companies that are struggling to manage their cash flow, one option to better understand organisational performance is to invest in accounting software. That way, organisations will have a detailed breakdown of their financial position and sales figures.
Mark Cleaver, the managing director of Bibby Financial Services Australia and New Zealand, highlighted some of the strong points to come out of the survey, with many businesses planning for growth.
“Among businesses that intend to borrow over the next 12 months, 32 per cent say they will borrow to fund growth, while more than one in five (22 per cent) will borrow to fund innovation projects, with both of these percentages rising from July 2014,” Mr Cleaver said.
“This is a positive sign that some businesses, in an effort to counter a stagnant economy, are becoming more proactive in driving growth.”
Mr Cleaver also highlighted that medium-sized businesses are the most likely to invest in coming months, reaching 72 per cent. Overall, two-thirds of companies are planning to undertake business investments.
While there are clearly obstacles that organisations are facing, there are also a number of strong signs for companies that are willing to invest in a growth strategy.