Category Archives: Budgeting For Business

Why A Cashflow Budget Is An Absolute Necessity In Business

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Master Your Business Cashflow
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There is no denying that creating a budget can be tough, which is why so many businesses choose to ignore it altogether. Trying to decide where to start and which tools you need to get it done are a hassle that some would rather not face. Taking the time to learn how to budget will save you from all manner of potential headaches down the road, whilst also helping to make your business a more profitable venture.

If you ask the average business owner what there bank balance will be at the end of the month, most will have no clue. While that may sound a little scary, it’s the case for altogether too many businesses that don’t take time to prepare and use a cashflow budget.

The businesses that have the best financial success are almost always those that have strict control over how their money is spent and invested. An increase in cash flow usually leads to mortgages being paid down sooner, bills and invoices taken care of in a timely fashion, and more opportunity to invest in business growth.

Coming across extra cash in your business does not happen by accident. Yes, sitting down and making a list of every revenue and expense can be time consuming, but it is time that ends up being very well spent. Once you get over the initial hurdle of starting to break down the finances of your business, you will quickly see how money can be saved and earnings increased.

The ability to understand the finances of your business means being able to make smarter financial decisions as you move forward. Simply studying your revenues may help you see the opportunity for additional income streams that would otherwise never have become apparent. Breaking down the expenses will allow you to spot areas where you are spending too much and where cuts can be made. Small changes translate to big savings over time.

You need to grow your business in order to survive. Maintaining the status quo will allow your competitors to pass you by and leave you behind. Your cashflow budget allows you to minimise the financial risk of a major decision or change in your business by modelling the outcome. With a cashflow budget you can test the possible results on paper before you make the decision. By testing a number of new ideas in this way, you can separate the good from the bad and prevent your business from making costly mistakes.

If you are operating your business without a budget in place and you want to learn how to prepare a cashflow budget, then I recommend you download my Cash Is King eBook and master your Business Cashflow.

How to Increase Your Business Cashflow Using The 80-20 Rule.

Welcome to Budgeting For Business

Cash Is King

Understanding your cashflow is critical to the success of your business. A business is not bankrupt even if it has Liabilities which are greater than their Assets provided that they can still pay their bills on time. However if you cannot pay your bills you are considered bankrupt even if your Assets are greater that your Liabilities. Is it any wonder that “Cash Is King”.

One of the biggest problems for start up companies is failing to ensure that they have adequate cash to cover the unexpected. (Tip:- If you are a business startup, some experts recommend that you should double your original estimate of expenses and expect your income to take twice as long to come in.)

Banks will quickly close down a business that runs out of cash. The Tax collector is another that will close you down if you fail to pay your taxes. Unfortunately, lenders do not look upon a business favourably if the business has failed to predict an upcoming cash crunch and have not pre-arranged finance. You need to set up borrowing facilities when you don’t need them.

Can You Answer These Cashflow Budgeting For Business Questions?

What happens if a key customer delays payment by a month?
If sales were to go up 30% does the business have enough working capital?
Do I have enough cash for that extra vehicle or do I need to finance?
Do I have enough cash to cover the Christmas holidays or next Tax payment?
Can I pay myself an extra $500 per month?
How many businesses reject an order because they know that they will not have enough labour to do the job, or don’t have enough capacity but never consider that they may not have enough cash to do the job?

All these questions can be answered if you have a good cashflow budget. So if “cash is king” then how can I get better control? The answer is to set up a Cashflow Budget For Your Business.

Cashflow Budgeting For Business

Balancing a cheque book is a simple form of cash flow management. Similarly, reconciling a bank account is a skill required by most accounting packages. So if you can do both these tasks then you are well on your way to Cashflow Budgeting For Business Success.