Pat Mokgatle | 23 May 2025
Pat Mokgatle is a chartered accountant who is head of entrepreneurial business at audit, tax and advisory firm BDO. He also runs a start-up, Decorum Stylists, which provides grooming, tailored suits, accessories and image consulting.
As business owners, we often hear the cliché that “cash is king.” However, we rarely take the time to unpack the core reasons why it is crucial to get money into the business quickly while delaying payments to suppliers. Many business leaders find themselves paying suppliers immediately and then chasing after debtors for the money to settle operational expenses. This model is unsustainable, often leads to the use of personal funds or loan facilities to keep the business afloat.
To address this issue, it is essential to step back and evaluate your cash flow situation. Consider whether you have cash to cover operating costs for the next three months without relying on incoming payments from debtors. If not, your business is in a vulnerable position - at risk if payments are delayed or debtors default. Your goal should be to generate as much cash as possible and plan accordingly.
The treasury function and cashflow forecasting are critical aspects of running a successful business. Yet many business owners find themselves scrambling at month-end, waiting for outstanding invoices to be paid to cover expenses. If this sounds familiar, it is time to change this by putting in some hours to analyse your business's cash flows. Understanding where the majority of the cash goes is vital - and in most cases, it is spent on salaries, followed by rent or mortgage payments.
To plan effectively for month-end, consider the following steps:
These steps are not exhaustive but aim to build an inclusive, robust monitoring system. The objective is to ensure that everyone in the business understands their role in generating cash and contributing to the business’s sustainability.
Remember that cash locked up in inventory or accounts receivable is not king. The focus should be on generating liquid cash that can fund operations and growth opportunities. 
By implementing effective treasury management practices, businesses can improve cash flow, reduce dependency on debtors, and create a more resilient financial model.
In conclusion, treasury is more than just a fancy term for managing cash - it is a critical component of your business operations that requires careful planning, forecasting and monitoring. By being proactive in this way, business owners can secure the cash flow needed to cover expenses, fuel growth and ensure long-term sustainability.
