Cash is King!
Cash Flow Management is the most important aspect of every business.
Business planning in the current environment will be difficult. How much will Covid affect you? When will restrictions be lifted? Apart from Covid, what other problems, issues and difficulties will you face and how will these impact on you in the future.
We all understand Profit and Loss statement and it is important to know whether you have made a profit however, the question asked most frequently is
“If I made a profit where is it?
This is why you need to understand the relationship between and the Balance sheet and the Profit and Loss statement. The Balance sheet will record the amount of money in the bank and what you are owed by customers and clients, money in, and what you owe to suppliers, staff, GST or loans and any other areas for payment outwards.
The Cash Flow report will pull all this information together to show the movement of money, in other words, it is the process of tracking how much money comes in and how much goes out, of your business.
A healthy cash flow ensures that the business can pay salaries and suppliers on time and have funds for growth and expansion of the business but also ensures that you have reserves to cover tough times. To predict how much money that may be available for your business in the future you need to prepare a budget or a forecast.
Before you start to prepare budgets you need to think about where your business is going.
The best way to start budgeting is with the key people, staff, advisors, and owners getting together and developing a number of assumptions about the future.
Having healthy conversations such as:There is no crystal ball with budgeting, therefore by helping you to develop a strong business plan with documented assumptions, we can offer you greater assistance when preparing solid budgets.
We help you work through every step of the process and by arranging a free consultation with us to discuss these critical component of your business together we can find solutions.
What does a consultation look like?
In your consultation you receive practical business advice, including understanding the need for accurate and regular reporting, what the roll of the Balance Sheet and Critical Cash Flow Reporting is. This information also assists with future Tax planning to ensure you have the right structure that will minimise taxation and ensures the future of your business is secure.
Key Areas we work on with you are:
- • How to monitor and control your cash flow
- • When you should be cutting costs
- • Managing cash on the disposal assets
- • How to get a business line of credit (before you need one)
- • Why leased equipment, where possible instead of buying, can create a tax break
- • Creating tax breaks, how to manage your taxation matters
- • How to stay on top of invoicing, payroll, and creditors
Our services go beyond tax returns and financial statements and this is what distinguish us from other accounting firms when it comes to Cash Flow Management.
We have developed considerable expertise in Cash Flow Management and offer a service not only created to give you more options and a better outlook on the process and a wealth of information so you can learn and understand how the process will work for your business.
- We work with you and offer a range of tools, templates, and checklists to help fast track your business success
- We have extensive connections to associates that will give you a bigger grasp on how your business can become cashflow positive and take back control of your business growth plan for the coming years
- We look at and help you to make additions to property, plant, equipment, and software expenses you may currently have
Let’s Eliminate Cash Flow at Risk for Your Business!
We want to help you eliminate cash flow at Risk!
This means the extent to which future cash flows may fall short of expectations as a consequence of changes in market variables or unforeseen factors. Working with the three main areas for Cash flow categories: operating activities, investing activities, and financing activities allows us to educate you about the difference between Cash Flow and Profit. The key difference between cash flow and profit is that while profit indicates the amount of money left over after all expenses have been paid, cash flow indicates the net flow of cash into and out of a business.Profit is the revenue remaining after deducting business costs, while cash flow is the amount of money flowing in and out of a business at any given time. Profit is more indicative of your business's success, but cash flow is more important to keep the business operating on a day-to-day basis so working with you to find the right balance is key in the survival of your business.
Should you need to apply for a loan, making sure you would absolutely get it we can help with solution that frees up cash flow by working with the money left over after your company has met operating and capital expenditure requirements. In most cases this is the best way for financiers to differentiate between a good investment and a bad one.
We take you through the process of monitoring, analysing, and optimizing your business to obtain the best results for the future of your staff and your business as a whole.
If your business constantly spends more than it earns, or your business is undergoing rapid expansion this means that you could potentially run into cash flow problems. Business expansion generally involves higher labour costs as new employees are hired, higher rent for additional space, higher advertising costs, and more capital investment for new facilities, equipment and having to maintain increased levels of inventory can also eat into excess cash. You need to make sure you have a robust plan in place, that you understand how to manage it and keep your business tracking every step of the way.
Vergona Randsmith Chartered Accountants is a smart option when it comes to seeking information and help with Cash Flow management.
Net cash flow is an important measure of financial health for any business.
Information you will need: After your initial free consultation you will need to gather some documentation so that together we can get started on the process. Our team can work with a current accountant, bookkeeper, or office manager to locate the right information to get the process started.
How is a Cash Flow Analysis Performed?
We perform Cash flow analysis by examining the components of your business that affect cash flow, such as accounts receivable, inventory, accounts payable, and credit terms. We then help you to more easily identify cash flow problems and find ways to improve your cash flow.
How do we Solve Cash Flow Problems
Many self-employed contractors are too busy with their day-to-day business activities to keep their books up to date and sometimes cash flow issues are simply the result of poor bookkeeping practices. That includes falling behind on paying bills and invoicing, and/or collecting payment from customers and therefore creates cash flow hiccups.
A simple remedy for many businesses is to use accounting software that can generate invoices, pay bills, and create cash flow statements and accounts receivable reports. Another option is to hire a bookkeeper, either way we are here to help you find the right solution for your business.
Many businesses get help with temporary cash flow shortages by setting up a working capital line of credit. When you get a credit line, you have a certain amount of credit in an account that you can draw on when you are short of cash and pay back on when you have extra cash. We can help you acquire the right line of credit with the best possible interest charges to make sure you don’t fall in the deep end.
If you have time to do only one business analysis every month, make it a cash flow statement to keep track of your cash position, and if you are not sure if your Cash Flow is positive that’s where we come in, let us help you decipher where you’re at right now.
You may not know that many profitable businesses have gone under because they could not pay their bills, this because they were waiting for money to flow in before they can pay out. Don’t let this happen to your business!
No business is too big or too small to create a winning solution.
Find a cash flow solution that works for your business by booking your free consultation today.
3 Simple Tips for Managing Your Cash Flow
Here are some ways to better manage your cash flow to avoid a cash flow emergency:
Collect receivables. Set up a collections schedule, using an accounts receivable with an aging report as a guide. Follow up on non-payers in imperative.
Control inventory. Set up a collections schedule, using an accounts receivable with an aging report as a guide. Follow up on non-payers in imperative.
End Unprofitable Relationships. Decide when it's time to end a relationship with someone who never pays because this type of business, in the end, is really a waste of your time and money.
At times, you may need to keep track of cash flow on a weekly, maybe even a daily basis so follow these three areas to define what is happening in your business:
- o At the end of this month, look at your total sales
- o Add up the purchases you have made that still need to be paid for
- o The difference is what you will need to bring in as income to stay even
If a monthly cash shortage continues for several months, you may just get further and further behind and then find that your business is not going to survive.
We suggest starting a conversation with our free consultation at Vergona Randsmith Accountants. This is one of the simplest things you can do to gain insight and corrective remedies for your business.