Nursing your business through the pandemic lockdowns successfully is one thing, but there is a danger in ramping up activity too quickly as the situation eases.
Accountants call it over-trading.
This is when a business runs up a big rush of sales on credit without the cash to pay its suppliers and can rapidly become insolvent.
It is easy to be misled by the figures on the balance sheet, which may paint an over-optimistic picture of the cash flow forecast, especially when some of this is predicated on fixed assets and on the prospect of new investment from lenders or investors.
Instead, the business should focus on cash management, which gives a much more realistic picture of assets and liabilities.
K2 will soon be offering a free Cash Management tool for businesses to download and use.