Your Cash Flow Is The Lifeblood Of Your Business

Category: Finance, Financial Planning.

Your cash flow is the lifeblood of your business. Your cash flow, and your cash flow analysis, is your number one tool to keeping your business solvent and thriving.

You can be billing thousands of dollars each month but if it takes your clients 30- 90 days to pay, your cash flow can be non- existent- particularly if you have expenses to pay while you re waiting for clients to pay you. Fortunately, the basic elements of your cash flow are really straightforward. Cash in. The equation is: Starting cash. Cash out. Pretty easy, right. Ending cash.

It s like balancing your checkbook. Good cash flow management enables you to predict the state of your future finances, and daily management makes it easy. If you keep a spending plan or budget, these numbers are tracked for you on a weekly or monthly basis. It makes creating a business plan, and modifying your plan, possible. Of course you don t want to be penalized for late payments, but push it as far as you legitimately can. It enables you to answer the question" What will your cash balance be six months from now? " Here are just a few tips to help you stay on top of your cash flow: 1 Deposit all checks/ payments you receive immediately. 2 Invoice frequently and change your payment terms to 15 or 30 days. 3 Collect receivables within 60 days. 4 Experts also advise using prenumbered cash receipts and checks for easier management. 5 Lastly, pay your own accounts slowly.

When you know what your past, and future cash, present balance is, you can create an accurate business plan. Marketing generally costs money. Let s take a look at two aspects of a business plan and how your knowing cash flow will help you: Marketing Plan. When you know exactly how much money you have now and can accurately predict how much you ll have six months from now, you can with relative certainty create a marketing schedule that meets your needs. Knowing your cash flow can help you get a head start on planning these campaigns because you will know what you have to spend. For example, let s say you want to produce a brochure this month, have a direct mail campaign the following month and then release a new product and a corresponding promotional campaign.

Operational costs. However, choosing to outsource a project or several tasks means you need to be able to pay a contract employee, and paying employees means you need to have a solid grasp of your cash flow. Many of the costs of doing business are fixed costs. If you don t it could mean being unable to pay someone for a job they ve been hired to do. And as any business person knows, you don t just wing it in business, you need a plan. As you can see, knowing your cash flow has a significant impact not only on your ability to do business, but also on your ability to plan your business.

Read more...

Selecting The Right Type Of Diamonds Is Very Important - Virginia Baltimore's Finance and Financial Planning blog:

Certified diamonds are those diamonds that have been graded in laboratories and have been issued certificates as to its quality.

ProFunds Group Has A Number Of ETFs Designed To Perform This Way - Finance and Financial Planning Blog:

Exchange traded funds are index funds which have advantages over open- end index mutual funds.