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Healthy cashflow is where all successful businesses are built or broken. It's more than just profitability even profitable businesses can collapse if cash flow is not managed properly. It's about making sure you've got a strong and realistic financial forecast in place, and you know how to properly manage your money.

While it's not as simple as ensuring that the money coming in is more than the money going out (although that's a great start), having a more detailed plan to keep you on track is crucial.

Cash flow doesn't start at the bank it starts with establishing financial projections before your first sale even hits the table. This is a great time to get your accountant involved while they are an end of year necessity, their knowledge covers so much more than taxes so build a strong partnership with them at the early stages and you will find their input invaluable.

Things to keep in mind:

Set realistic targets and know exactly what it will cost you to achieve these targets.

Keep your overheads and outgoings reasonable and affordable. Start off with smaller premises, outsource jobs like cleaning or PA duties if your time would be better spent on your business, and find quality suppliers who you can negotiate great deals with.

Don't overstock. While stock still has value, it's not real money until it's sold. Manage your stock so you can keep up with demand without pouring cash into sitting product.

Underestimating is as damaging as overestimating. Keep it real know your margins, know your bottom line, and build your targets from there.

Factor the quiet periods into your forecast every business has them and making sure you have funds saved from the busier months will ensure you can still keep up with your overheads during these times.

Always be looking for ways to increase your income - new clients, bigger contracts, extended product lines, more services etc. If you can add value to your business and for your customers by branching out then go for it!

So what can you be doing month by month to make sure you're on track?

Keep on top of your accounts. This means making sure your clients / customers are paying for your services as you invoice so you can pay your suppliers in a timely manner too. Having clear Terms of Trade and getting your clients to keep to your payment terms should keep you from having to chase accounts. Keep on top of your invoicing too! Getting your invoices out on time each month will ensure you will be paid, so you can keep running a happy and financially healthy business.

Always calculate your real cashflow each month and measure it against your forecast to make sure things are going smoothly. You made need to make small adjustments from time to time, but if you're not meeting your targets consistently, it's better to know sooner so you can find alternative methods to meet your goals.

Consider your cashflow when making any decisions for your business. Remember: excess cash now may be needed down the track so check your cashflow forecast before you commit to any expenses or purchases.

By Carolyn Skilling, Chartered Accountant and Business Advisor