Very cool article from http://www.forbes.com/sites/moiravetter/2015/06/16/hows-your-flow-cash-flow-not-profit-as-predictor-of-entrepreneurial-success/2/ on cash flow for businesses
According to the SBA, cash flow is among the top 7 reasons new businesses fail. Heed this warning and you’ll have the capital you need. Ignore it and join the 50% of all new businesses that fail in the first 5 years. A profit & loss statement can be beautiful; it can make investors feel good, it can even make you feel good if you trust what it’s telling you. A fat line of profit can be exciting—but until you collect the cash—the line is only theoretical and relatively worthless.
Entrepreneurs are rarely successful if they can’t master cash flow. Cash flow management is critical to running a successful company. Whether you plan to be in business a few years, or the rest of your life, that won’t happen until you can keep enough cash to bank roll operations or to fund growth. If there is only one document you look at religiously on a weekly basis, cash flow is the one.
Business and cash are variable
The challenge with cash flow is that business owners are all working with variables that are…well…variable. You may have bills due out and receivables due in on a particular date, but we all know those dates are relative. Customers get behind in their bills, we may get behind and when the system monitoring the ingress and egress gets out of synch, there is chaos. And chaos in cash flow has a snowball effect. It can cause entrepreneurs to quickly assume a reactionary stance—to do foolish things like borrow beyond our means, pay otherwise unnecessary fees, or ignore the discipline of spending in alignment with predictable expenses and receivables. For-self-funded entrepreneurs this can be particularly dangerous because you may be tempted to throw good money after bad to keep the ship righted, ultimately reducing reserves not on track to be recovered.
Automation is better for cash machines than cash flow
One of the early problems I faced with cash flow management came from my reliance on technology. Let’s say you use QuickBooksTM to manage your money, or any other system for that matter. Most tools have a built-in cash flow projection tool. Set it and forget it—sounds great, right? The problem with using automated cash flow projection tools are two-fold. And hint—the problems are people—not technology.
Automated cash flow tools are only as good as the data (or data enterrer.) An automated tool takes its cue from the data entered so it is important that someone is focused on getting due dates and terms accurate. If you only enter your bills every couple of weeks and you aren’t careful to enter the accurate invoice date, your starting date may revert to a system default date and the payable will be wrong in the system. If you aren’t careful to read the invoice terms (some may be due on receipt, some may be net 10 and others may be net 30) then your entered due date won’t be accurate and you won’t be able to rely on the projection your software is making.
Automated cash flow tools don’t take into account the real variables in business that you as an owner, or cash flow manager, know to be true. For example, you can invoice customers Net 30 all day long, but you know which customers will pay Net 30 and those that are religiously Net 60 payers. Automated cash flow tools rarely have the logic you know about clients built in. If you know clients are sliding into Net 45 and Net 60 but you are still relying on an automated report that calculates on Net 30, the report is irrelevant.
Financial fitness is in your hands
An entrepreneur should check the health of their cash flow as often as an amateur marathoner checks their heart rate on their Fitbit®. After all, cash flow is probably the single biggest indicator of the health of your business. So, if automated tools with preset defaults don’t allow for the variables needed for accurate forecasting—what is the answer?
A manual cash flow projection that works
Back to technology—DIY and simplified—the spreadsheet. People can demonize Excel® all they want, but I never got my cash flow under control until I began using a cash flow report I generated myself. It allowed me to account for the realities I knew about when money would go out and when I could reasonably expect it to come in. Once set up and customized to your needs, the spreadsheet approach doesn’t take much time to keep accurate providing both peace of mind and a predictable balance in the bank.
Here’s how it works:
Cash Balance. Set up the spreadsheet to show a one-quarter snapshot (in weekly columns). The first row shows your beginning cash balance.
Projected Receipts. The next section shows receipts projected to come in that add to your cash balance.
Projected Expenses. Next , setup ‘projected expenses’ that deduct from the balance. This section is important because you can enter invoices you ‘will have to pay’ allowing you to project rather than relying on a system that only knows the payables that have been entered.
Cash Remaining. The next row of the sheet shows total cash remaining in that week (starting cash balance + projected receipts – projected expenses = cash remaining in that week.) By plotting inbound receipts in the week you realistically expect checks to arrive, you get a more reliable view of when you’ll have cash on-hand. By plotting expenses (the big things: rent, wages, payroll taxes) as well as variable costs like projected inventory expenses needed to fulfill a job, you get a realistic picture of your Total Cash Remaining—week by week.
Cash in Reserves. In a final row beneath total cash remaining enter your ‘cash in reserves’ so you can plan for the weeks you may need to draw on them. Viewing this over a quarter helps you ensure that the reserve draw is in fact temporary and will be restored the next time a lump of cash comes in.
This may sound very elementary—IT IS. Or, it could sound like a huge pain—IT CAN BE. But, if you don’t have intimacy with your cash flow, you are relying on little more than luck to get your business past the magic 5-year mark.
Follow the money—in fact, chase it
There is something very comforting—in the often uncomfortable world of entrepreneurship—about knowing the story behind your P&L. Knowing something that only your banker typically knows…whether the P&L is backed up by cash in the bank that comes from good management. That being said, when was the last time you checked your cash flow? If it’s been more than a week, it may not be flowing at all.
We've all had to face that god-awful feeling of waking up to a Monday morning nightmare. The tired eyes with which we regard ourselves reflect the exhaustion that we feel so acutely. Often we will just press the snooze button, sleep on and face the ire of our boss, to whom we only feel bile.
Unsecured personal loans today have been used to cover a shortfall in finances, but must be paid back or face the penalties. I, like most people of my generation have felt the pinch of economic crisis; we've had the pressures of international economic collapse upon our slender shoulders since the days we were born.
Dogmatic spirits have flourished, while that to which ambiguity is not an alien feeling, the future is not so rosy-bright. No. It looks a little dim, it feels a little cool, but the cash loans go on, they live in another realm to whom platonic joy is an unknown theology.
“The laws of nature dictate that with every reaction there is an equal and opposite reaction, one which must be looked at through a 'scanner darkly'.“
Natural flow of cash and finance
Business works on similar principles, it provides a home for the natural flow of liquid dough. It opens its' jaws to the wealth of the poor, it gapes and frowns and munches down the clowns and fawns, the young the unborn - it eats with relish, it excretes with menace. Working out the easiest forms of finance, or credit is not something to be left undone, it should be one of the first things you put on the to do list before you begin the New Year. The basic function of instalment loans is to provide a means by which money is available to those to whom it is most needed. It should be regarded with this in mind and not as something to be used too regularly.
Sometimes a crisis will strike you down and leave you on the back streets. The truth of the matter is that often you’ll just have to suck it in and see how best you can get yourself back on the road to success.
There has been a distinct reduction in the free availability of credit now that we are well and truly within 'The Age of Austerity' Because of this reduction in credit availability, many people have found themselves short of cash and without any means of getting it. It can be a really tough situation, one that can leave you feeling distinctly unhappy, and caused un-due stress on our loved ones. There is no a very well-trodden path when it comes to trying to get the money you may need quickly - small loans online.
Available from online websites, they are a quick means of getting funding. Available 24/7 and with quick approvals, they're there for anybody who needs them, whenever they need them. As for the forms; they're easily completed and there for you whenever you want. They are for those unfortunate occasions and times when the other options are limited. Once the loan is received it is time to think carefully about how you are going to maximise the money you have at your disposal. Be careful to bare in mind the repayment schedule for personal loans, it will not simply disappear, it will be a 'ticking time-bomb' if you do not have plans to get it paid back on time.
In the United States, a recent study showed that one out of every five individuals exhibits a bad credit history. Due to this problem, people who want to buy a new home will have to apply for bad credit mortgage loans.If your credit history is less than perfect and you are trying to secure a mortgage, you may initially feel that your situation is doomed to failure.
Mortgage Loans For People With Bad Credit History
The prices of real properties are very expensive nowadays and if you have poor credit by now, the fact that you are required to be accepted and approved for such a high loan sum can be an added setback to your present quandary. The good news is that, your condition is not a hopeless case. There are several programs available today with the main purpose of helping people to acquire a bad credit mortgage financing or loans.
People who have good credit have more loan opportunities and options, although many lenders are now becoming more and more understanding about the financial difficulties that borrowers experience. Due to this, the mortgage lenders are now willing to grant home loans to individuals who have low credit scores, but at a higher cost.
Consider The Loan Interest Rate
You should recognize that the interest rates in bad credit mortgage loans are higher and the most efficient way to improve your credit score so you can obtain a lower interest rate is to enhance your credit rating.
In actual fact, bad credit loans have some advantages over traditional mortgages. The chief benefit in these mortgage opportunities is that qualifying for it even with a bad credit report is quite easy. These mortgages permit you to establish equity with your house purchase even though you have a foreclosure or have filed for bankruptcy in the past.
Even if the interest rates of these loans are higher than the prime rates, you are given the chance to purchase a new residential space with little down payment or no cash down at all. You can just look at it as paying for monthly rentals while you are taking advantage of tax deductions and home ownership consequently.
How To Get Qualified For Mortgage Loans?
There are some key points and tips that you should remember and perform so you’ll qualify for a mortgage loan notwithstanding your bad credit history. It’s essential that you get a copy of your credit score. Note that you will not lose credit points by checking your credit report. You will only lose some points if you carry out several credit inquiries for items like auto loans, credit card loans or other credit applications. If you appropriately fix any error in your credit history your credit rating can increase and the interest rate in your mortgage may be lessened.
When applying for bad credit mortgage loans, you should closely examine your credit history and make sure that your financial transactions are reported accurately. If you notice something incorrect, it’s vital that you file for a dispute with the agency promptly as well as contact the creditor that reported the wrong data or information.
“Every time you borrow money, you're robbing your future self.”
― Nathan W. Morris