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My Blog

Understanding Your Cashflow



 Welcome to the month of July. We are done with the first half of the year and started the countdown to the remaining half of the year.

Our Newsletter for this month is on an integral part of every business; an area that is generally misunderstood by most business owners, but interestingly plays an important role in every organization. Have you taken time to look at your Cash flow Statement? Can you tell where Funds are disbursed in your Business? Do you understand the effect of your Spendings? The art of struggling to understand and manage your cash flow can be a huge distraction to your business; in this series, we will be providing you with quick tips on the basic method of understanding your cash flow.

  Our Areas of Concentration will be on:

 - Definition of Cash Flow
 - Drivers of Cash Flow in a Business
 - Facts about Cash Flow
 - Quick Tips on Understanding your Cash flow and applying it to your Business.
 - Managing your Cash Flow effectively.

 What is Cash Flow?

 Cash Flowis the movement of money into or out of a business, project or financial product, and can be measured at any specified period of time.

  The Following are the drivers of Cash flow in a Business:

  • Accounts Receivables (These are money owed to a Business by its customer, as a result of services provided or goods sold).
  • Inventory.
  • Accounts Payables (These are Vendor Payments, owed to vendors, for goods bought/services received on credit).
  • Capital Expenditures(Purchase of Equipments)
  • Borrowings/Debt Servicing.

  It is worthy to note that your Cash Flow originates from 3 Basic Operations:

 a) Cash Flow from Operations

 b) Cash Flow from Investing

 c) Cash flow from Financing

  Most Business Owners have problems with Understanding their Cash Flow because of the following facts: 

 a) A Profit or Loss in a Business does not equal Cash Flow.

 b) An Increase in Cash in your Business is not always good.

 c) A Decrease in Cash is not always bad. 

  Many Business Owners have problems understanding and interpreting their Cash flow, because of the technicalities involved; but I want to challenge you today, to take the simple test below, write down your answers and put it into practice, and watch your business grow; I bet you will be so thankful for this enlightenment:

  •   Focus on the TOP 3 changes in your Cash for the Month.
  •   Decide whether each change is good or bad.
  •   Write one line description of each change and look at the effect, it has on your Business.
  •   Once you are able to prove the effect of the change in your Business, hold on to the result and use it as a base, in your Decision making.

    By doing this exercise periodically, you will have a better grasp of your cash flow, and see its effect on your Business growth.  I will like you to try this exercise and forward your feedbacks. In my next article, I will be giving you tips on how to effectively manage your Cash flow in your Business.

    Please feel free to contact us, if you will need further help in understanding your Cash flow and producing your Cash Flow Report. We will love to help you.

   Remember: The best time to take control of your Cash Flow is RIGHT NOW.

   

 



 
 


 

 

4 Comments to Understanding Your Cashflow:

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Stock Trading Tips on Monday, May 25, 2015 4:58 AM
You have some great information catching here.i will recommend my friends to visit this blog.I am not sure where you're getting this type of info but good topic. I needs to spend some time learning more or understanding more.
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Rosemary on Monday, May 25, 2015 11:43 AM
Thanks for the great comments. I derive pleasure in educating people about managing and increasing their Cash flow. I am always inspired to write these articles and with my wealth of experience, I am able to put everything together to make great topics.I notice that each time, I am inspired to do this, People are motivated and this encourages me to do more. I really appreciate it and want to assure you that I will keep posting more informative articles. So Keep Checking back for more.
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Mcx Tips on Tuesday, August 25, 2015 2:10 AM
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aussie writer on Monday, November 06, 2017 11:44 PM
Understanding your cashflow latest month is on an integral part of every business and the great role in every organization. Making and updating the business manage your cash flow with this rosyanbookkeepingservices site.
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