Cash is king or is the king dead?
For some tradies in business, sometimes cash doesn’t quite make it to the bank business account or financial accounts…
It seems from an initial perspective that this cash is beneficial in a number of ways. Yes it is great to have cash in your pocket with immediate purchasing power. Whilst this cash can be used for a bite to eat, buy whatever you need, clothes, or for a short break somewhere. Sometimes there is the view that the taking of the cash means a reduction in turnover which in turn reduces profit and taxes.
But there is a downside and it tends to comes much much later in a number of ways. Usually the first thing is you need to go to the bank for a loan or to roll over your existing facilities with the bank. The result here is you fail to get approval from the bank or the interest rate you are offered by the bank seems too high. In some cases we are seeing people pay between 3% to 5% more than they should for their business funds because their financial accounts from their accountant do not show a strong ability to service the loan facilities you require.