For a good twenty years, I managed cash daily, weekly,
monthly and quarterly at privately held companies I worked for. Consistently working cash flow so we were
prepared for anything.
Step two for managing cash is using a weekly cash management
tool.
This is a 52 week spreadsheet that tracks cash flow going in
and coming out of your bank accounts. General checking, payroll account (If you
have a separate account) savings account, and line of credit. In addition, this
spreadsheet tracks accounts receivable, account payable and any credit card
debt you may carry.
Using this tool will have you looking at your accounts
consistently and the tool allows you to manage and plan, when you need borrow
from a line of credit, pay down the line, and or transfer money into savings.
For the gym, we have a savings account and we sock $500 to $1000 each month to cover the semi-annual real estate property taxes. In addition, if there is more than enough we will put additional funds aside to cover new equipment for the gym.
Why manage cash weekly? This is the path that provides knowledge and direction for your financial goals for your business. This is so you know where you have been, where you are and see where you are heading at all times. Knowledge is power. Mapping out cash coming in and going out weekly, allows you to see and plan what is needed.
A question I am constantly asked - Why do I need to manage cash flow daily when I use QuickBooks.?
Great question - the answer - CASH is KING. Cash is worked daily, weekly, monthly, and quarterly. Cash is the lifeblood of every business. If you don't manage the cash coming in from accounts receivable and going out, accounts payable you run the risk of putting yourself out of business. When you don't manage sales and accounts receivable you run the risk of missing income. (See previous post ) If you are not managing your expenses. i.e. accounts payable you can run the risk of negative circumstances where you have to scramble. The numbers are only information, with that information, you make choices and decisions how to move forward.
A short story about cash flow. Back in 2008 I was working with a company that sold goods wholesale to large retailers. There was one company that we had to constantly monitor as there were rumbles of bankruptcy in the air. Frightening, especially when there was over $500k in outstanding receivables. They continued to make promises to pay, however at the end of June we were notified they filed for bankruptcy protection.
The good news, we had one advantage, our product the business was selling, was their best seller. They needed our product. I immediately created a letter to the President of the company that filed bankruptcy stating all sales will be paid in advance by a wire. The President agreed. How did we do with cash flow? The cash sales from the bankrupt company funded our growth as the business grew 74% that year. You need cash to grow.
Your business will fail with poor cash flow management, so why run the risk?
For the gym, we have a savings account and we sock $500 to $1000 each month to cover the semi-annual real estate property taxes. In addition, if there is more than enough we will put additional funds aside to cover new equipment for the gym.
Why manage cash weekly? This is the path that provides knowledge and direction for your financial goals for your business. This is so you know where you have been, where you are and see where you are heading at all times. Knowledge is power. Mapping out cash coming in and going out weekly, allows you to see and plan what is needed.
A question I am constantly asked - Why do I need to manage cash flow daily when I use QuickBooks.?
Great question - the answer - CASH is KING. Cash is worked daily, weekly, monthly, and quarterly. Cash is the lifeblood of every business. If you don't manage the cash coming in from accounts receivable and going out, accounts payable you run the risk of putting yourself out of business. When you don't manage sales and accounts receivable you run the risk of missing income. (See previous post ) If you are not managing your expenses. i.e. accounts payable you can run the risk of negative circumstances where you have to scramble. The numbers are only information, with that information, you make choices and decisions how to move forward.
A short story about cash flow. Back in 2008 I was working with a company that sold goods wholesale to large retailers. There was one company that we had to constantly monitor as there were rumbles of bankruptcy in the air. Frightening, especially when there was over $500k in outstanding receivables. They continued to make promises to pay, however at the end of June we were notified they filed for bankruptcy protection.
The good news, we had one advantage, our product the business was selling, was their best seller. They needed our product. I immediately created a letter to the President of the company that filed bankruptcy stating all sales will be paid in advance by a wire. The President agreed. How did we do with cash flow? The cash sales from the bankrupt company funded our growth as the business grew 74% that year. You need cash to grow.
Your business will fail with poor cash flow management, so why run the risk?
Create that new muscle, a new habit and learn how to work
your cash flow differently. Cash happens
right now, in this very moment when you receive a payment or are purchasing
goods or services. Working cash daily and weekly forces you to look at and plan. You are the CEO of your business and the CFO.
Lead your finances as you lead your business.
Remember, CASH is KING, so you need to know where you are at all times.Creating simple, easy baby step habits opens the door to new possibilities for you and your business.
Remember, CASH is KING, so you need to know where you are at all times.Creating simple, easy baby step habits opens the door to new possibilities for you and your business.
Next is step three - Cash Flow Management - Planning and
mapping out sales i.e accounts receivable, expenses, i.e. accounts payable and
credit card debt weekly.
Get in to action, and get cracking on managing your cash daily. If you have any questions or need help with managing your cash, reach out and ask for help, e-mail me at d.rosenfelt@cfomadeeasy.com to set up an appointment to discuss your needs.
Get in to action, and get cracking on managing your cash daily. If you have any questions or need help with managing your cash, reach out and ask for help, e-mail me at d.rosenfelt@cfomadeeasy.com to set up an appointment to discuss your needs.
Warmly -
Debbie Rosenfelt
President/CFO
Debbie Rosenfelt
President/CFO
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