Cash flow
Where do we start?
In answer to number 1 is quite simple and there are lots of reasons for doing cash flow, here are the top four:
Make better plans and decisions
Understand where you are spending your money and where the money is coming from.
Help protect your business and operate within certain conditions.
Expand and contract at the right times
Where do we start?
A good cash flow always starts with a good flexible chart of accounts, from a good cash flow you can run a set of accounts, whether it is cash or the Accrual method (accounting jargon for when cash is received or paid as against when it is earned, or purchases received). We want to know how much cash we have at a certain point in time whereas the government wants you to account for earnings and purchases at the time they were made.
What is a cash flow?
Is precisely what it says it is the measure of cash inflows (Revenue) and cash outflows (expenses) so a Person/business/company can tell where they are at a precise time and make decisions on a way forward
When do cash flows help us?
It helps us by telling us what balance of cash we have and any exposures or incomes that we might be expecting at a precise moment in time
Cash flows and KPI’s always make me remember what my father used to say, “you have not made a sale until the cash is in your account completely cleared and funds are available to spend”.
If you do a daily cashflow you can react very quickly to any events that may arise.
The reason that I often have more than one bank account is because I do not believe in keeping all my eggs in one basket also:
There now is another reason for having more than one account, banks today do not show you any loyalty so why you should, let me give you an example for any reason banks can hold any cash funds going abroad and any accounts can be frozen for any number of reasons and the period can be for days, weeks, months!!
If this happens, how are you going to carry on trading if you only have one account or account at the same bank?
With my course on Cash Flow, we will build a chart of accounts that suits what you want to do, I will show you how to build a cash flow statement which you can then build your own budget and forecast, believe me when I say that this is a simple task for anyone once it is set up and you will be in control of your business on a daily basis once you have set this up.
Post articles and opinions on Leeds Professionals
to attract new clients and referrals. Feature in newsletters.
Join for free today and upload your articles for new contacts to read and enquire further.
