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  • #989642
    EnviousCarCare
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    Hi Guys and Girls.

    Need some hints and tips in regards to cash flow. my business seems to be working from week to week. Cash comes in and goes out straight away. Ive tried cutting out anything that isnt essential and the bank account always seems to be in minus.

    Thanks in advance for any help or advice :)

    #1173178
    ShellysBookkeeping
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    Have you prepared a proper cash flow analysis? Do you carry inventory or stock or do you only supply services? If you would like some help doing a cash flow analysis contact me offline and we can track when and where your money goes

    #1173179
    joeljp
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    A few things to consider…

    1. Is your business actually profitable? Are your expenses covered by the margin that you set?
    2. Are you collecting your receivables in a timely manner?
    3. Have you got enough working capital to cover the period when you have lots of expenses all come in at once?
    4. Have you done a properly budget on what goes out each week or month?
    5. Can delay payments or extend the payment terms with your supplier?

    Cash flow and collecting receivables are the two most difficult things in any business. They are not hard but both need a conscious effort to get it right.

    Regards, jj

    #1173180
    FalzonFinancial
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    Collecting debtor accounts can be one of the more difficult parts of running a business if not executed efficiently. I have some solutions to automate this process which can work equally well for you.

    As outlined above, regular and up to date accounts are crucial for tracking performance. Further, it is also important to note that cash if different from profit.

    #1173181
    MissSassy
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    Great responses as usual on this forum.

    Have you also thought about your prices – It may be that your prices have not increased in line with your expenses increasing?

    #1173182
    Johny
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    Need some hints and tips in regards to cash flow. my business seems to be working from week to week. Cash comes in and goes out straight away. Ive tried cutting out anything that isnt essential and the bank account always seems to be in minus.

    Based on the original comment, I think this reply is probably most relevant:-

    Further, it is also important to note that cash if different from profit.

    Cash flow is all about money coming in and going out. Profit is about cutting stuff that isn’t essential.

    If your starting point is a debit bank account balance, and your balance at he end of the moth is a similar negative balance, then it could just be your starting point that is the problem.

    Potential way to resolve would be to inject funds into the account to get into positive territory. This may create a loan back to you or the bank which needs to be repaid, but the net effect would be reducing the overdraft costs.

    If your starting point is minus, and your end of month balance is minus more, then you do have some profitability issues.

    Probably worth speaking to your accountant, or even your bank guy may sit down with you as it may be there is a hard core debt would be in your interest to reduce.

    I used to do this sort of stuff, with account reviews. But that was a long time ago, so not sure how it all works now.

    #1173183
    BradFry
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    Hi EnviousCarCare,

    Firstly, I would ensure that as another poster has pointed out, that your pricing is reflected correctly. This will need to take into account the market you operate in, direct and other costs as well as the margin you are seeking to make per sale.

    Next I would review not only your trade terms with sales, but your creditor terms as well. Is there a possibility of you pushing out your payables to 30 days while making your receivables 7 days? Other creditors such as the ATO can have payment plans in place for business who are struggling to pay within the statutory time frames, but I would use this option as a last resort if your cash is still struggling.

    Next I would set or review your budget. You need to ensure the business is actually viable. You mentioned you have cut down on expenditure but what about non week to week costs. Is there anything lumpy that could happen once a year that could bring the cash position down? (Annual bank fees or subscriptions come to mind).

    Brad

    #1173185
    ThexArm
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    Firstly, It is important to do a break even analysis to ascertain your fixed expenses on monthly basis. Irrespective of whether you sell or not you need money to cover these. If you have relatively high fixed expenses and low sales or low gross profits then it is difficult to see money in the bank account.

    Secondly, do a weekly cashflow statement in an excel sheet. Forecast your money coming in and going out as per their due dates. Then try to adjust payments a little to ensure bank balance stays in green.

    #1173186
    Brad Turville
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    This is a super common problem for businesses of all sizes, especially micro-small businesses so you’re definitely not alone feeling the cashflow pinch.

    Great comments from all contributors. Ensure you invoicing and debtor management strategies are top notch. If the moneys not in your pocket then it’s in someones else’s, think of it as giving your clients an interest free loan. Simply invoicing is not good enough. Until it’s in your bank account it doesn’t exist.

    It’s great that you are running a lean business and not excessively spending but the number one goal for any small business is to drive revenue. I just write a whole blog on this exact topic. Sometimes it’s not the fact of poor cashflow but not enough revenue driving in the door.

    I do congratulate you on putting your hand out for help, because in this community, the tribe will always respond with guidance. Good luck.

    #1173187
    Anonymous
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    Hi all,

    Just a quick note to let you all know that this thread is now quite old, so the OP may have things sorted by now.

    Cheers,
    Jayne

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