Posts Tagged cash position

Cash Flow is King

My success in business has, from my oppinion, partly come from the fact that I monitor cash position like my life depends on it, and well I guess it does!

For me, knowing where every dollar is and what the company actually has in terms of available funds to work with or to secure future downturns (a cash buffer), is paramount. I believe a business needs to know this on a detailed level by considering existing debts, future debts and future incomes.

I find that completing a schedule at least monthly has given me the peace of mind to know just what the cash in the bank account really is available for. Its amazing that what has flowed with that is successfully creating a cash buffer that allows me to feel secure and use funds to market and expand further.

Suddenly, paying the BAS each quarter, or the superannuation costs each quarter, (which let’s face it, always are paid with an ounce of anger because they feel like wasted money that is bringing us no gain right?!), become less stressful because I know the funds are available. In fact that that the funds for my compliance payments are available and there is still more for my business and my lifestyle.

Remember, “Paying Tax Means You Are Making Money” – It’s a good thing! This view is very important. Almost as much as ensuring we do not live beyond our means. If you have a profit of $100K, it’s just the way of the world, $30K is not available to the business, (excluding other deductible considerations of course).

Anyway, I have attached a copy of the early template for a cash position calculation I use within my business every month, and still do. It’s tailored to my retail telecommunications company of course which may not suit many businesses but it maintains a structure that can certainly lead you in the right direction to knowing your cash position and monitoring “every dollar”!

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