By Valerie Cardenas Step 2: Use a Cash Projection  & Management System Use a system that can project your REAL bank balance into the future for ten or more weeks.  Think of what this could mean for you in the way of peace of mind.  A system that predicts cash balances will give you the insight to know exactly what must be collected in the way of receivables as well as what additional sales must be made.  This system will tell you what fixed and variable expenses will be covered while paying you as the business owner, paying your taxes and more.  Another benefit:  you will be working toward increasing your cash on hand which typically increases profitability. Using a system would greatly reduce or even eliminate the potential of having to tell vendors and even employees that their paycheck or payment will be delayed.  Not only does this reduce stress, it builds credibility too.   Your credit will improve. Your employees will feel more secure. Plus, you will have cash available to deliver your services and/or products as promised which will lead to more satisfied clients and referrals. One method I recommend is using an Excel Worksheet that shows weekly incoming and outgoing funds.  Most accountings systems, while they do a good job showing actual cash flows (based on receivables, payables, etc.), do not easily convert to the flexibility desired in cash management projections. Using a system like I suggest here will allow for a variety of real life situations where your accounting system won’t, such as clients who pay early or late. When using Excel or a similar spreadsheet program, shifts in dollar amounts can be easily adjusted to imitate real life as to when monies will be collected and expenses can be moved forward or backwards depending on current…

By Valerie Cardenas Step 1:  If You Can’t Measure It, You Can’t Manage It. Understanding the old adage that cash flow is “King” and “Queen” and knowing your business numbers inside and out will assist you to make effective business decisions that can lead to improved cash flow. Cause for consternation can be thinking that your cash balance in the checkbook should be the same as the Profit and Loss (P & L) net profit.  While your true cash balance is reflected on your Balance sheet, it is not reflected on your P & L because it is only one component of your cash flow.  Cash flows are affected by Accounts Receivable, Inventory, Accounts Payable, Capital Expenditures, Borrowings and Debt Service and Other Timing Differences. Some questions you can ask yourself that may uncover undesirable items that have an impact actual cash balances: Is your pricing in line with your fixed business overhead, regular expenses, and desired cash for growth and profit margin? Who are your largest customers and are they paying on time? What percentage of your total revenue relies on those customers? What is the cost of managing your high demand customers? Are they worth keeping? Are you overpaying for services whether it is employees, independent contractors or vendors? Do you know your payroll and corporate tax numbers so they can be paid on time and still meet other goals? With a good understanding of your numbers, you will enjoy more confidence, peace of mind and more income to the bottom line!  

Genuine goal setting is the first step toward positive, deliberate action. Although goals are often imaginative and visionary, they are always a prelude to action, a track to run on, a course to take; they are never a substitute for reality. They are an expression of your noblest qualities; they are an exercise of your desire for personal leadership – the desire to be a bit better today than you were yesterday, and the determination to be even better tomorrow. To set optimally effective goals, you need standards to follow. It is like playing basketball: you need to know the object of the game and the rules; otherwise, you would not know whether to run with the ball, kick it, throw it, or roll it. For your goals to have the magnetic attraction that draws you toward them and propels you toward success, follow these principles of goal setting – these “rules of the game”: 1. Your goals must be your own personal goals. It is obvious that you are more likely to accomplish goals you choose for yourself than those urged upon you by others. But your goals must also be “personal” in the sense of “private.” If you know that your goals plan will be seen by someone else, you may tend to distort it to impress others instead of to satisfy your real needs. Unless they are based on your own internalized values, your goals will have little or no meaning, no appeal and no value. 2. Your goals must be stated positively. Your mind functions through mental images; you literally “see” through the mind’s eye a picture of each thought. A goal expressed negatively eliminates a mental image, and the mind cannot picture a void or a vacuum. Take a simple illustration. You may say, “I’m…