Never Run Out of Money! Use Cash Forecasting to Stay Solvent

StrategyDriven Managing Your Finances Article |Cash Forecasting|Never Run Out of Money! Use Cash Forecasting to Stay SolventWill you have enough to make payroll? It shouldn’t be a mystery.

Don’t run out of money might be the first commandment of any successful small to medium enterprise (SME). You need cash on hand to pay your employees, service your debts, and keep your supplies rolling in on time. In short, you need to cash to keep your business running.

Cash forecasting is the tool you need to make sure you have the cash you need. Instead of looking at accounts payable and receivable (AP and AR), cash forecasting predicts how much actual money you will have on hand to meet your responsibilities. In addition to keeping you solvent from day to day and year to year, cash forecasting has other benefits, too.

Identify Potential Problems Ahead of Time

Cash forecasting can be like a check engine light with premonition for your finances. You can spot trouble spots months ahead of time and plan your way around them. In doing your first-quarter forecast, you might discover that you will have additional expenses in March, or perhaps you will have shipped sales or provided services that aren’t due to be paid until April. Your sales will show up in your AR report, but you probably won’t actually see the cash until April. By predicting this sort of shortfall in March, you can reduce expenditures in February or secure a line of credit with your bank to prevent problems before they happen.

Plan ahead to keep problems from ever occurring.

StrategyDriven Managing Your Finances Article |Cash Forecasting|Never Run Out of Money! Use Cash Forecasting to Stay SolventCreate Strong Relationships with Employees and Suppliers

Your employees depend on you to provide them with a reliable paycheck. They count on that money to meet their household expenses, pay rent or a mortgage, and buy groceries. Your suppliers are in business just like you. They need your payments to meet their own expenses. Neither employees nor suppliers will want to do business with you if they can’t depend on you. Being a reliable partner will establish trust and goodwill that is invaluable in running your business.

Long-Term Planning

You need to make larger expenditures sometimes to keep your business running. Maybe it is time to upgrade all your laptops or invest in that software you need to manage your growth. Be careful. Longer-term forecasts may not be as accurate as short term ones. Nevertheless, your cash forecasting can help you be strategic about when to make more significant investments, how to spread the expense if necessary, and when it might be a good idea to delay a more substantial purchase. Forecasting also helps you put some of your revenue aside for a rainy day, because there will always be rainy days, and expenses or slumps you can’t predict.

Cash forecasting is one of the basics of business. In 2018, CB Investments did an analysis of 101 failed startup businesses. Of those 101, the second most common reason they failed was that they ran out of cash. Cash forecasting is essential for avoiding disaster.

A solid cash forecast is also something your investors will need and something a bank will want to consider before doing business with you. It should be a living, breathing part of your business, updated continually, and consulted often. Cash is king, don’t be caught without it!

6 Practical Strategies to Take Care of your Financial Future.

StrategyDriven Practices for Professionals Article |Financial Security|6 Practical Strategies to Take Care of your Financial Future.Everyone loves to work with the assurance of a secure future. However, to make it a reality, you must take some serious steps or measures that will build your financial security. An excellent place to begin would be to write down your financial goals. Wondering how to get started? Learn about this and other great strategies that will help you take charge and secure your future financially.

Have a financial plan

A financial plan is a strategy that allows you to manage your finances so as to observe financial health and achieve your goals. It provides guidelines and strategies that will help you achieve your goals. A plan forces you to budget, manage your debts, plan for your retirement, save, and invest. Without a plan, it is impossible to exercise discipline and stay focused on the goals.

Tip: Set financial goals that are (SMART) Specific, Measurable, Achievable, Realistic, and Time-bound.

Live within your means

Most of us love to keep up and fit into the demands of society. What we forget is that such acts take a toll on our finances. If you have to borrow money to have the latest iPhone or bag in the market, you run the risk of failing at your financial goals. Spending money on things you do not need alters your financial plans and eats from what could be your savings. To avoid this, have a personal budget to keep you in check. A budget will help you stick to your initial plan and help you fix problems that accrue quickly. Keep in mind that avoiding debts at all costs is a healthy practice for your financial goals.

Deal with tax problems

The inability to pay taxes owed in full is always a threat to our financial security. As you know, tax evasion is a federal crime. While not all tax problems are self-inflicted, we are still held accountable for them. The good news is that all is not lost. There are methods to settle back taxes with tax authorities successfully. All you have to do is find a tax attorney who understands the law to get you a plan that works in your favor. With the help of an attorney, you can reduce the amount of taxes you owe through a resettlement plan. This will allow you to organize your finances and achieve your long term goals.

Manage your credit cards

Do you manage all your bills or make purchases using a credit card? If you do, you are aware of the beauty and the technicalities of credit cards. Credit cards work best if you pay your balances on time and when you keep you’re spending at a low level. On the other hand, if you default payments, then things might not be rosy. You are looking at increased interest rates, late payment fees, and credit damages. Remember, a bad credit score is a nightmare to your financial plans. Other than being denied loans by banks, you risk lawsuits by creditors.

Additionally, when you are using a credit card to make purchases or take a loan, ensure to look at the interest rates. Remember, the longer you stay with a balance on the card, the more money you will pay. This affects your future because of the years and vast sums of money spent on clearing one loan.
Tip. Try to go for lower interest rates anytime.

Practice saving

Most people experience difficulty in setting aside money to pass as their savings. When you fail to save, you fail to think about the future. You cannot have a secure future if you have nothing to spend at that time. Think about what you wish your life after retirement to look like, or the short term goals that you wish to finance. It is essential to open a savings account and throw in some coins. If you have different streams of income, you can talk to your financial institution or financial advisor on the best saving plan to adopt.

Invest your money

One way to create wealth is through investing. Yes, building a portfolio of quality investment can be a significant step in achieving long term financial goals. Putting your money to work to earn better returns helps you prepare for hard economic times and also enjoy financial freedom. For example, inflation impacts on our financial well-being and one way to beat it by investing in assets that offer capital growth and higher incomes. Remember what to invest in will depend on your savings or income. You can always talk to an expert to ensure you are venturing into something that will offer you Return on Investments (ROI).

Final thoughts

Creating a secure future from a financial perspective is a huge personal step you should take. It requires developing a realistic financial plan and committing to the measures devised to achieve the goals set. You can use the tips we have shared and tailor them to suit and meet your financial goals.

Key Financial Tips For Entrepreneurs

StrategyDriven Managing Your Finances Article |Finances|Key Financial Tips For EntrepreneursStarting a new business venture can be an incredibly exciting time, but you must also be careful and well-organized during this period, especially when it comes to your finances. Money will be incredibly precious when first starting out so you must have a clear budget in place and know where every single cent is being used. This can be tricky with so many areas that need attention and particularly if this is your first business venture. With this in mind, here are a few financial tips for entrepreneurs which should help you to manage money effectively from the start.

Secure Enough Funding

Possibly the biggest mistake that entrepreneurs will make is not getting enough funding to get the business up and running to a high standard. It can be hard to change how your brand is perceived, which means that you need to get off to a good start. Work out exactly how much money you need factoring in every expense and then use a variety of funding sources to reach this amount. This might include:

  • Personal savings
  • Loans from friends/family
  • Angel investors
  • Venture capitalists
  • Bank loans
  • Crowdfunding

Keep Costs Low

Every cent counts when first starting out, so you need to find ways to keep costs as low as possible without it impacting the quality of the product/service. There are a few different ways to do this, including:

  • Outsourcing instead of hiring staff
  • Working remotely
  • Going paperless
  • Using alternative energy
  • Negotiating with suppliers

Car Finance

Most modern-day businesses will require at least one vehicle if not a fleet as part of the operation. This can be a huge cost, which is why car finance deals are a smart option. There are poor credit car finance deals from specialists like CVS, which can make it possible to lease a car even if you have poor or no credit at all.

Invest In Insurance

It’s always better to have a safety net when it comes to insurance, and this is true in the business world too. The types of insurance that you use will depend on your industry but make sure that you have adequate coverage before getting started. You can usually make savings on insurance by shopping around and consolidating insurance policies.

Reinvest Into The Business

Once the business starts to find success, it can be tempting to splash the cash and increase the amount that you pay yourself, but this is a classic mistake. Instead, this money should be reinvested back into the company to drive further success. Putting more money in marketing is always a great idea as increasing brand awareness, and reputation is vital for growth and competing against the bigger brands in your industry.

Every entrepreneur will have concerns over finances when launching a new business, and this is for good reason. The above are a few key tips to keep in mind which should help you to use your money smartly to help get the business up and running to a high standard. You should then continue to be stringent with every cent as the business starts to grow.

Freedom Financial Gives Five Financial Management Tips Every Successful Entrepreneur Follows

To achieve and sustain success, entrepreneurs must be skilled in a variety of areas. One of the most important of these is financial management. The lack of proper financial management is one of the primary causes of early failure for entrepreneurs. Freedom Financial provides five key areas of finance that are critical for entrepreneurs to have a greater chance at success.

Proper preparation for lean months.

Entrepreneurial income typically fluctuates from month to month and even from year to year. Income can swing from high to low in a matter of weeks, without warning. It’s important for entrepreneurs to prepare for the lean months by setting aside money during higher earning months, according to Freedom Financial. While, it’s tempting to spend money to reap the benefits of your hard work, it’s wiser to put money away while it’s plentiful. Without a reserve of cash set aside, some business cannot survive.

Keep business and personal finances separate.

Many entrepreneurs fund their startups using money from personal savings or a personal credit card to get the business going. In the early stages of entrepreneurship, it’s often simpler to conduct all your transactions from a single account. Once your business starts growing, Freedom Financial recommends separating business and personal finances, is essential. Keeping funds separate funds simplifies accounting and gives your business credibility. Keep business funds in a business account and pay yourself as though you were an employee of the company.

Diversify your assets and your efforts.

Entrepreneurs have to maintain a delicate balance between focusing on their entrepreneurship efforts and diversifying their income and time. Statistically speaking, entrepreneurship has a high risk of failing. Freedom Financial recommends entrepreneurs to hedge against that risk by putting time into other ventures, putting money into other investments, or sometimes even maintaining full-time employment.

Get professional financial advice.

You may be able to do many things on your own, but you cannot do everything on your own. When it comes to matters of finance, it’s better to seek professional council. Getting professional advice from an accountant and tax professional can ensure your business is both operating legally and taking advantage of the possible tax deductions. It’s wise to shop around for the best fit for your business, but this isn’t an area where you should cut costs.

Minimize business expenses.

As your business begins to generate more revenue, owners may increase their business spending, justifying these expenses as necessary for business growth. Remember that the more you spend, the less profit your business makes. Always aim to minimize business expenses by negotiating lower prices, seeking lower-cost alternatives, and forgoing unnecessary expenses. Freedom Financial suggests having another person who has to sign off on business spending, to help keep the owner’s spending impulses in check.

To achieve and maintain success, entrepreneurs must always plan for the financial future and be careful not to take the present circumstances for granted. Spending time reviewing the business finances and constantly seeking ways to improve are two steps entrepreneurs can take for better financial management.