Archive for Titanic Cash Flow
Valuable Tips to Help You Keep Your Grip On Your Cash Flow
Posted by: | CommentsKeeping a firm grip on your cash flow is critical today. One misstep can mean endless troubles for your business. For Donald Hunter Financial, I use a customized financial model I’ve developed to make sure I’m growing the key success numbers I’ve projected for my business.
Examples of key success numbers I project and track in my financial model include:
- Cash on hand (money you have in the bank)
- Accounts receivable aging (number of days my customer takes to pay my invoices)
- Sales (commissions received, advising fees, etc.)
Direct costs to generate a sale (commissions paid, loyalty programs, referral incentives, FEDEX costs, etc.)
- Indirect marketing costs to generate leads (online and offline marketing costs)
- Number of leads generated (to me this is a financial indicator)
What are the key success factors in your business? Are you currently tracking them?
Rapper Snoop Dogg once said, “I’ve got my mind on my money and my money on my mind.” You must have this Snoop Dogg-like tenacity about managing your cash flow, otherwise it’ll slip right through your fingers.
Before we get into my cash flow management systems, I want to make sure you’re not already in a bad cash position. If you’re currently having difficulties with your cash flow, you may need cash flow solutions like factoring or purchase order finance to help mitigate this problem. You can contact me at (866) 323-9123 to get help with factoring or purchase order finance. Once you’re back on track, I can help you put cash flow management systems in place to grow.
My simple tracking system below won’t help you dig your way out of a financial hole. It’s a preventive measure, meant to keep you from getting in trouble in the first place.
My customized financial model helps me compare my actual performance with my projections for the year. Comparing plans against performance on a frequent basis ensures I identify problems and develop solutions before things get out of hand.
Accounting Trends
You need systems in place to easily analyze your business trends. I look at trends for specific numbers over set periods of time and compare them to previous periods. You want to make sure your numbers don’t fluctuate dramatically. If trends are positive, then you can feel good everything is going well. You must look at your negative trends in-depth to make necessary changes and modify your course quickly to stay afloat financially.
If you need some help from a financial expert to set-up your financial tracking systems, I can coach you through setting up a workable process for your business.
Now I’ll share simple valuable tips I use in my business with you, which helps me easily control my business cash flow.
Simple Trend Tracking System
- Cash on hand: your average bank balance
- Accounts Receivables aging : average number of days until your customers pay your invoices
Cash On Hand
You can look at your average bank balance for the past 30 days to keep your eye on how much cash you have on hand. Cash on hand is “king.” With online banking, I look at how much money I have daily. I look at the average of the past thirty days to give me a snap shot of my account balances. I don’t worry about the fluctuations caused by normal bills paid and income received throughout the month.
I compare my average bank balance over the past thirty days to the same time periods in the past – six months and one year ago. If I notice a significant change not explained by fluctuations in my revenues, I know something’s happening with how I’m using cash or managing my cash receipts.
If you have ongoing trouble with cash shortages in your business or personal finances right now, take a look at what’s going on. Your business may be headed towards a financial “iceberg” and that can be quite chilling…
Accounts Receivables Aging
The second number I look at is my average number of days to receive my customer’s payments. This will fluctuate with economic cycles. When the economy is slow, you’ll typically see this number increase.
Do the same thing as I did with my cash on hand example above. Compare the average number of days your customers take to pay your invoices in the last six months to the same number from a year earlier. This number should be consistent. If you’ve improved your billing practices, you should see a decrease in how long your customers take to pay you.
A slight increase in how long your customers take to pay your invoices during slow times may be acceptable to you. A big increase at any time means that you need to take action and take a serious look at your billing practices.
These financial indicators provide invaluable insight into how your business is doing. If your trends are stable or positively increasing, then your business is in a good position to grow.
Your Customized Financial Tracking Model
To effectively manage your business, you’ll have to do more than simply compare “cash on hand” and “receivable aging.” I wanted to give you my simple system to help you keep your eye on your business cash flow, but you need a more sophisticated system in place to position yourself for growth.
You’ll want to get control over your cash flow long before you apply for a commercial loan. For the first five business owners who call me to get help with their cash flow, you’ll receive a free strategy session worth $250. You can sign-up for your complimentary business coaching session today with me to get more valuable tips on truly understanding your business trends.
Call me today at (866) 323-9123 with any questions you may have for me about how you can better manage your business cash flow.
You’ll Be In Position To:
- Identify and lock-in on your key success numbers
- Manage your cash flow with ease
- Set goals and action steps to create positive trends for growing your business
- Identify and mitigate your financial risks
- Implement your valuable trend tracking system
- Create your own sophisticated financial model for projecting and comparing actual results
You can also sign-up for my Business Finance Survival Report to the right of this post. I’m currently not charging for this valuable finance resource while I develop my curriculum for coaching other finance professionals. You’ll learn valuable financial options to help you grow your business right away.
I’m here to help you improve your cash flow. I have financial products for you like factoring and purchase order finance solutions to help you get cash to grow your business today.
Call me at (866) 323-9123 for more information on getting quick cash for your business right now.
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I’d love to get your comments on how you manage your business cash flow. If you’re a professional who helps business owners manage their cash performance, add your comments below to help the Donald Hunter Financial community grow.
Discover How to Avoid Titanic Cash FlowTM Disaster Before It Strikes!
Posted by: | CommentsTitanic Disaster Can Strike Anytime!
Managing cash flow has never been more important for businesses as it has been in recent times. Failing to control costs and maximize revenues and profits can mean “Titanic” disaster for your business. Detecting the real causes can be complex and hard to put your finger on the problems because of the nonlinear nature of a business.
The challenge with managing cash flow in your business comes from the fact that almost every function in your business can impact cash flow. The usual business functions we think of which impact cash flow include:
- Sales
- Pricing
- Receivables
- Quality of product or service
In this post, Donald Hunter™ gives brief examples of how other functions in your business can affect your cash flow in a “Titanic” way. Examples of other functions include:
- Customer service
- Credit
- Claims
- Returns
- Shipping
- Marketing
We will illustrate a few examples below of how different functions in your business impact your cash flow.
Customer Service
Customer service impacts cash flow either in a positive or negative way. Your customer service representatives need to be friendly and courteous with your customers or else it will be easy for your customer to buy a substitute. When I eat at a restaurant for the first time, I’m as interested in the customer service as I am in the food. If the service is below my expectations, I probably won’t go back unless I’m forced to. If the quality of the food is also bad, then I definitely will never eat there again.
Being courteous isn’t the only quality your customer service representatives should have; they should be skilled in solving your customers’ problems. Being able to quickly identify what the customer’s problem is and giving simple solutions to get your customer quickly using your product or service is crucial.
Remember, you don’t get to choose your family in life and you also don’t always get to choose your customer. You may need to exercise extreme patience and love in how you respond to their questions and challenges no matter how silly they may seem.
The last thing I’d like to say on customer service is it is very important that customer service has visibility into other functions like credit, sales, returns, etc., so they know how to best serve your customers.
Credit
It is important if you extend credit to your customers to have a monitoring system in place to detect if your customer begins to show signs of having difficulties in their business. Negative signs will include things like slower payments, customers request larger credit lines, and you may hear from other suppliers who may be experiencing problems with your customers.
If payments begin to extend out further and further and you don’t have an agreement in place with them that allows this behavior, then you have a problem brewing. Now, you may choose to extend credit to some customers as much as 90 days, but they should have some special value to your business and they should be credit worthy.
If your customer begins to show signs of credit challenges, you should make Customer Service and Sales aware of the situation so they can adjust their focus with the customer, saving you from getting caught holding the bag.
Returns
Too many returns can have a significant impact on your business cash flow. Quality is the obvious reason for returns, but sales and marketing can also have a negative impact on how many returns you receive on a monthly basis.
If your offer is unclear or misleading, it can result in someone buying your product or service only to later discover it is not the right product or service for them. You can reduce your returns by qualifying buyers better and evaluating how you compensate your sales force, which will improve your business cash flow.
Cash Flow Management Assessment
One of the services Donald Hunter™ offers is to analyze your business’ processes, your customers’ experiences with your firm, and make recommendations on how you can improve your business cash flow. We have financial solutions that can help you get cash quickly to sustain your business and avoid “Titanic” disaster while we help you correct any problems in how you manage cash flow in your business.
Our assessments and models are designed to deal with the nonlinear nature of your business functions to help us identify the root cause of your cash flow problems. We also offer credit monitoring services to help you stay on top of what’s going on with your customers’ credit.
Sign-up now for your Complimentary Cash Flow Management Consultation. We can talk more specifically about how to avoid “Titanic” disaster and ways you can improve your business cash flow. We will share with you simple things you can start to do immediately to see better results in your business cash flow straightaway!
