In this podcast I'm going to look at
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Profitable businesses have become basket cases because they run out of cash. Profit is important, that always must be a financial goal, part of your thinking and action. Moreover, cash is what keeps the lights on, the wheels of your business turning. It’s like the fuel that drives a car, no fuel, no movement.
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How to make your cash flows better
To keep a ready supply of cash to pay your bills, your suppliers and yourself adopt good practices. Those include
A cash plan, a forecast is not a strait jacket, it is critical to realize your life and your business aspirations and goals. If you can’t think beyond today, then you have a problem. Planning is liberating, empowering and life affirming
Above all, you need to know that Cash is your financial priority. This week’s podcast tells you this, plus calculations, tips, and advice.
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My mission is to help you get better acquainted with your best friend in business, your numbers- improving your money mindset and wellbeing, making profit, save tax and time.
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Cash is the most important financial number in your business and it takes centre stage in this week's I Hate Numbers podcast. In this podcast, I'm going to look at three things. What cash actually is? Why is the most important number in your business? And finally, I'll share some tips with you on how to best manage your cash.::
You are listening to the I Hate Numbers Podcast with Mahmood Reza. The I Hate Numbers podcast mission is to help your business survive and thrive by you better understanding and connecting with your numbers. Number love and care is what it's about. Tune in every week. Now, here's your host, Mahmood Reza.::
Hi folks. Welcome to another weekly episode of I Hate Numbers. My mission is to get you better acquainted, more friendly with your best friend in business, your numbers, improving your money mindset and wellbeing, making profit, saving tax and time, what's not to love? Let's crack on with the podcast. Firstly, what is cash?::
Cash may be sometimes referred to as money. It’s the notes and coins in your purse, in your wallets. It's the money that flows in and out of your bank account. Money is not the promises we make to people when we buy or sell goods and services. Cash is that commodity that we can physically see on our bank statements or we can count.::
Secondly, why is cash your number one financial priority today, tomorrow, the week after, and forever? We saw in last week's podcast episode on profit that you can make a profit without actually paying for your supplies, materials, goods, and services. You can sell goods. The cash may not be received from your customer, but it still generates a profit at that point.::
At some point in the future though, you have to pay your suppliers, you have to pay your staff, you have to pay lenders. You need money in from your customers. Paying your staff in promises or buttons just won't cut it. You need to pay back your lenders. If you do not pay your lenders on time, then your lenders will get quite upset and, potentially,::
pursue a legal court of action against you. If you do not pay your suppliers on time, if cash does not leave your bank account to settle the debts that you have with them, then they will, as a minimum, cut supplies to you, you will not be able to operate, and then, legal action may then follow. You need cash to pay your taxes.::
You need cash to pay yourself, your number one asset, the major caulk in your business. Cash is the commodity that keeps the wheels of your business turning. Imagine your business as a car. Cash is the fuel that keeps that car going. Once you run outta cash, then close the lights on the way out of the building. It’s the end of the road.::
Being profitable is absolutely key. Having cash though is even keyer. Many fine profitable businesses have become financial basket cases because they run out of access to, and they run out of cash funds. And lastly, what about some tips about how to best manage your cash? What can you do to keep an eye on your cash and make your cash flows better?::
Now, to keep a ready supply of cash to pay your bills and your supplies, you must adopt good practices, and here's four key elements of that. Number one, manage the credit that you give to your customers. Set out reasonable payment terms. Don't be afraid to be asking for partial or full payment upfront. Payment terms to your customers can be upfront on delivery, a certain number of days from invoice.::
Don't overextend the amount of credit that you give to your customers. Check them out. What's the risk exposure that you have? Set up as many different ways of accepting payment as possible. Make it easier for the customer. Accept credit cards, debit cards, internet payments. The more ways a customer has of setting their debt, the easier it is for them.::
Secondly, make sure you have a fit-for-purpose record and accounting system. You need to monitor and keep an eye on your cash flow, keep an eye on those customers that owe you money. Get your invoices out to your customers on time. And in this age that we live in, digital accounting is the way forward. For the price of less of a cup of coffee, you can have the ability to keep an eye and keep up to date with your cash flow.::
Thirdly, pay your bills. Make sure you pay your bills on time with your suppliers. Do not alienate them and upset them. A good relationship with your supplier is critical to keep the wheels of your business turning. Paying them promptly can be very useful, especially if you need a short extension. If you upset your suppliers, whether they be your staff or those who supply your goods and services, your freelancers, then they will withdraw their supplies.::
If you don't have access to those supplies, you will not be able to sell. The better your history, the more likely they're going to step in and help you out when times become difficult. And finally, do a cash flow forecast. Now, a cash flow forecast is where you step outside of your comfort zone and you look ahead in your business, you translate your business story.::
How you see your business unfolding, how you want to drive your business forward, and translate that into what the cash impact is. Don't think of it as a straight jacket. It's critical to realise your life and business aspirations and goals. Your cash flow forecast will help you reach that end destination.::
And if you can't think beyond today, then you've got a problem in your business. Whether those goals are pivoting, taking on new staff, growing, increasing the rewards that you take out of the business, having money to take time off, to take a break, invest in new marketing capacity, your cash forecast will help you get there more speedily and efficiently.::
I appreciate you listening to this episode of I Hate Numbers. If you've enjoyed this podcast, then please share this episode so others can benefit. Even better, leave a review on Apple Podcasts. Until next week, folks, have a wonderful week. We hope you enjoyed this episode and appreciate you taking the time to listen to the show.::
We hope you've got some value. If you did, then we'd love it if you shared the episode. We look forward to you joining us next week for another I Hate Numbers episode.