Thus, proper management of business funding is extremely important to keep your business afloat and make it successful. The most important step in any problem would be the first step, understanding the problem. This is how you must approach your business funding problems. This understanding will lead to you managing your business funding effectively. The word cash flow has more to it than the layman’s opinion that it is just a fancy word describing the transfer of money to and from your business account.
Software programs can help. Good accounting software will let you budget income & expenses and will in exchange budget your cash flow. This makes it easier to make wise spending decisions, and not to overspend. After all, it’s hard to argue with the facts when they are sitting right there in front of you! Reports can also be a great help. These reports show information about the cash intakes and outflows for your discounted cash flow for the selected date range.
So… what is cash flow planning? Cash flow planning is projecting your future cash inflows from sales, services, and loans, and comparing them to your future cash flow needs (suppliers, salaries/wages, loan payments, taxes, etc.). The difference between the two is your net cash flow.
So the worst case situation could be sales target made, sale made at a loss and cash flow is negative or worse still no cash in from sale as customer does not pay in 60 days or ever.
Having cash available when you need it is crucial but you also have to know how and when the cash flows in and out of your business. You just don’t “know” these things. There are skills involved to measure, monitor, and manage cash.
Cash Flow Tip No 9 – When things get tight, triage your payments. Call all your suppliers and negotiate extended periods or deferred payments. Don’t pay the biggest debt first, pay the most important.
There are a lot of other companies who think they need to include several metrics on their scorecard so that it can be more effective. However, this is not entirely true. A direct relationship on this does not matter. Chances are, if you end up with so much metrics, you will end up having a hard time finding which one is more important. This is particularly true if you will use metrics that are really irrelevant to your evaluation. Once you make do with these irrelevant metrics, you will lower complications that can only defeat your main purpose of setting up a metric system.
6) If possible, draw on experienced people in the recruiting industry. There are many forms of compensation plans and different structures to consider. Be open to working with others who have the potential to get your business up and going.