View Full Version : Cash Flow Management
02-20-2001, 09:27 AM
How do you guys manage your cash flow. Do you set up two separate checking accounts,savings etc.
I know credit cards help curve it. But if you don't have credit cards, how do you do it.
I had a situation when one month I made over $8,000.00. But my checking account was in the negative.
I guess what I trying to say is. HOW DO YOU SEE, AND KEEP YOUR MONEY. OR AT LEASE GET A EYE ON IT.
I know it's a process, so I'm willing to learn.
Any suggestions or comments will be GREATLY APPRECIATED!
02-20-2001, 10:41 AM
I don't have a big company, and there are probably others who can shed more light on this than me, but I think this is one of the most important and least talked about areas of business.
You can be 'making' all kinds of money, but you can make as little as one cash flow mgt mistake and lose it all.
You've got an account flush with cash on the 15th and decide to buy that new piece of eqpt. Then by the end of the month the payment comes due on all of your other materials, but you have a few big customers that are slow in paying. You now have bills to pay and no $$ to pay it with, even though the books say you should be loaded. Big trouble.
I don't really have any kind of formula for managing my $$. But I am very diligent about collecting my $$ from my customers. Make sure your customers pay some $$ up front, and that you collect your final invoice soon after completion (like 15 days or less). I don't buy any big equipment (10k+) until the end of the season (or I wait until the start of the new season), when I know where I really stand financially.
02-20-2001, 12:15 PM
when i bought the lazer last year it made the winter hard for paying for every thing. so i paid off my per.discover card and use that for biz. only till the biz can pay it off in the spring. i have found that when your "pre approved" for a biz. card its not so easy to lie and get big credit like you can for personal cards. i know a lot of people that started biz like this and it works you just have to make sure you pay for the card every month be it with discovers money or money the biz. makes. discover offers low rates on there checks till june . pay off by then and i think its well worth keeping the biz. going . and if you come across a large job that will pay well but don't have the money for mat. dadadada charge! its takes "somebodies
money" to make mone
i always wanted to change a that qoute
how do you think big biz. works and the gov.
02-20-2001, 05:57 PM
Stonehenge is right, you have to know that your cash is coming in, and that all are paying. You also have to know where your money is going. I charge out parts and supplies to each piece of equipment. I can then keep track of repair costs, and it figures into your cost per hour of operating/owning each piece of equipment.
I also agree with Stonehenge, unless I have to have a piece of equipment, I buy off season. Saves a lot of money.
02-21-2001, 01:59 AM
To a small business this is the most important thing you can do from a finacial standpoint. Since your not a publicly traded company, wall street and stockholders don't care what your profit and growth rates are. Its the cash you bring in and pay out that pays you. Become a scrooge with your cash and you will be in better shape and have more when winter and or retirement comes.
02-21-2001, 03:00 PM
I got it all figured out!
No cash,No flow :D
02-21-2001, 08:17 PM
Setup a budget using a program like Quicken, QuickBooks, MS Money, etc. Stick to the budget, as much as possible. Avoid complusive or impulse buying. Before you buy sit down and figure up all your expenses and your available cash and do not buy or spend more than you have available.
Credit cards can be a good way to buy something now and pay later as money comes in, but they can be bad if you still spend more than your budget will allow or you continue to buy more and do not pay off the other first.
02-21-2001, 09:15 PM
Keep a minimum about of cash in your business checking account to meet incoming expenses, because checking only pays about 1 to 2 % if that. Put all exess cash in a business brokage account, like a money market, which pays 5 to 6%. Then you go from there to put that money to work in investments.
One important lesson in cash flow management is to take in cash fast and draw out your expenses long. For example, get prepaid contracts and pmts on receipt.(with in 30 days)(CASH IN)and pay your expenses 30, 60, 90(CASH OUT). I prefer to transfer balances on credit cards to the end on the year where no interest is due.(even negative interest is possible, -1 to -2%)
If you would like to make $75 on setting up brokage account, for a referal fee, I would be glad to help you guys. Thats $75 in your pocket.
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