The Importance of Cash Flow for Hotel and Hospitality

Cash flow
Cash flow

Hotel and hospitality businesses face a raft of challenges and, while issues such as reducing costs and increasing footfall may seem like the priority, it’s important to keep cash flow at the forefront of your business operations.

Cash is king in any business. So, it’s vital that you keep on top of your cash flow if you want to ensure that you are in a financially sound position, now and in the future.

And, if you take your eye off your cash flow, you can quickly run into problems.

We’ve taken a look at why staying on top of your cash flow is so important.

Make better plans and decisions

If you stay on top of your cash flow, you will always know where you stand financially, meaning you will be able to make better plans and decisions, and avoid putting your business at any sort of risk.

Understanding your income and outgoings will help you to plan ahead, avoid risk, and gain an accurate insight into your current situation.

Expand at the right time

If you’re hoping to grow and expand your business, it’s important that you can establish whether you are in a sound position to do so. After all, expansion can pose a huge threat to a business if it’s not carefully planned.

Whether you’re taking on new members of staff or looking for bigger premises, any form of growth requires you to have cash behind you and it’s important to be sure that you will be able to afford the additional costs.

Understand what’s coming in and going out

Managing your cash flow effectively will instantly give you a better idea of what is coming into and going out of your bank. This insight will not only show you where you stand but will also help you identify areas of the business where you can cut costs if needed.

This is important as cash flow problems will impact your relationships with your employees, partners, suppliers and investors.

How can you manage your cash flow through challenging times?

Cash flow forecast​

A cash flow forecast is vital for any hotel and hospitality business as it outlines how your business is going to perform and grow at different milestones.

This will not only help you to ensure that you have enough money in the business to cover your operational costs but it will also help you to make realistic revenue projections and manage your inflows and outflows, which is critical to establishing a healthy cash flow.

Cash flow support apps

Cash flow support apps are expertly designed to give businesses of all shapes and sizes a real-time view of their cash flow. Using one of these apps will help you optimise your monitoring and gain accurate, up-to-date insights into where your business stands financially.

Review your cashflow forecast

There’s no denying that the last few years have been challenging. We have not only had to manoeuvre a global pandemic, but we are now in the midst of a cost of living crisis which is also taking its toll on all UK businesses.

With this in mind, it certainly pays to regularly review your cash flow forecast, as well as your profit and loss reports, and adapt your business strategy accordingly.

Why choose Stewart Hindley?

If you’re considering becoming a bed and breakfast host, get in touch with a member of our skilled and experienced team who are on hand to help you discover your dream B&B property.

Stewart Hindley
Specialist financial experts helping you secure commercial loans across the hospitality, leisure and commercial property sectors.

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