Changes In Comprehensive Income Does Not Flow Through Income Statement Cash Flow And Its Role In Business

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Cash Flow And Its Role In Business

Maintaining a positive cash flow can be the difference between a great business and a disaster. The CPR of operating cash flow is:

COLLECT all your bills on time every time.

PAY your bills at the last minute.

REQUIRE cash or direct debit payments wherever you can.

TIP: Make sure you build enough profit into your products.

Cash, cash flow and cash recovery

How many times have you heard: “Cash is king”! Well, THIS IS THE KING.

Without cash flow you have nothing in business and with it you have absolute power.

Just sit back and imagine that you have a business with lots of money. Sounds great, doesn’t it! But don’t get too carried away just yet! Cash must be submitted before you can claim it.

You need to figure out how you can achieve a reasonable steady cash flow and how we can keep it. You need to learn how cash flow works and why it appears and disappears.

TIP: Everything you do in business should be based on the CPR of Business Profit – Cash, Profit and Revenue.

· Without CASH FLOW you have no flexibility or growth

· Without PROFIT, you have no building blocks.

· Without INCOME you have no business.

TIP: It all comes down to managing your available cash flow.

What is cash flow management? Simply put, you can pay your bills as and when they fall due, including your business growth requirements. The question is, can you do it?

TIP: If you can’t pay your bills when they’re due, seriously consider the following.

Sales

Have you planned a sales forecast? Are you hitting your sales goals? If not, you may not be generating enough sales volume to pay the overhead from the profit generated. You also need to generate enough cash after expenses to allow excess cash for profit. If not, make some changes and increase your sales.

TIP: Increase sales using the Octopus system

Go to http://www.commandobusiness.com/octopus_system.php

Costs

Do you have a budget? If you’re paying more than your budget allows, you’re on the verge of bankruptcy. That’s why you have a budget! If you comply, you will not allow them to spend more than the allowed amount. If you’re spending too much, stop! Get out of the roundabout, take control and stick to your budget.

TIP: Learn about budgets and get out of a cash flow crisis

Go to http://www.commandobusiness.com/financial_crisis_%20part_two.php

Collections

The fastest way no. 1 to bankruptcy is not sending your bills on time. Ship them early and pick them up on time. Even if they are overdue by a day, remind your customers that you are not a bank and charge them a late fee. They buy, they pay and you collect. That’s how it works.

TIP: If you’re too soft to do it, get wise, outsource the work

Accounts

Even if you can afford to pay your bills by the due date, only the frustrated pay their bills early or on time. Pay them off as long as you can. This is the cheapest form of financing you can have. Think it over. If your bills are like mine $1,000,000 a month and I put it off for 21 days penalty free, I’ll make an extra $50,000 a year just in interest.

TIP: If you are too soft for this! Get out of business. You are no good to yourself or to anyone.

Conclusion

How do you know if you’re in the middle of a cash flow crisis? Or worse, what if you’re not sure how to get out of trouble, even though you could avoid it with some very simple strategies?

Here’s the first step in determining if you may have a cash flow problem. Ask yourself the following questions and give yourself the allotted points for each answer.

Yes – 5 points

Sometimes – 3 points

No – 1 point

1. Do you have a sales budget?

2. Do you have an income and expenditure budget?

3. Do you know how much you need to generate to pay the bills for the next months?

4. Do you mail or require payment before it is due?

5. Do you delay paying your bills?

6. Do you have a recovery process?

7. Do you reconcile bank statements with income and expenses twice a month?

8. Are you reducing overhead by 5% each month based on your forecasts?

9. Do you enforce and maintain a certain profit margin for all products?

10. Do you eliminate unnecessary expenses each month (not returning $5 on the dollar)?

Calculate your points and compare them with the following results:

0 – 25 You need to take drastic measures to avoid a major crisis

26 – 35 You’re just ranting, you need help, but you don’t know it yet

36 – 40 You are doing well, but continue to strive for improvement

41 – 50 You are among the 10% of the most successful companies. Don’t rest on your laurels.

If you enjoyed this article or want some FREE business tips and tidbits, go to http://www.commandobusiness.com

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