Run your business using your Cash Flow Schedule, not your bank account!
Whoever coined the phrase “Cash is King” was only partially correct when they published it to business owners nationwide. We would like to argue that “Cash FLOW is King!” It is all too commonplace when small business owners run and manage the entire financial department of their company based on how much money is in the checking account. You cannot run your company based upon how many dollars are in your bank accounts, you must run it based on your cash flow. If you do not have a cash flow schedule and you are not using it daily… get one! You see, having money in your account is like having a well full of water. If you draw out too much water at once and use it up you will never survive through the drought. However, if you manage your water carefully and distribute it on purpose and very deliberately, you can make that water last a long time, getting you through a potential drought and allowing that water to provide the most good. This metaphor is a direct example of how a small business should manage its cash and the only way to manage cash like this is to run the financials of the company from a cash flow schedule. This allows the business to draw off only the most necessary funds to pay bills and employees while giving management a clear picture of how funds will be used across a two or three month period. Furthermore, if the company has an aging payables list, a cash flow schedule will allow the management to make realistic and deliberate commitments to creditors based solely on the cash flow. So remember, “Cash Flow is King” and the cash flow schedule should be your daily guide towards running your business. To find out more on how to manage financial and other key areas of your business with greater effectiveness, contact Talan today for your FREE BIZstrength Profile. And if you would like to make more money on the side, you can look here.