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Be Wary of Bad Advice

Do you ever read cash flow articles to learn how to improve your cash flow?

If you do, beware of the advice you read! Most articles have "common knowledge" lists that are often bad decisions for many businesses! There is usually a final recommendation that directly relates to something that the author is selling.

Worst of all, the fixes are usually cosmetic but don't dig down into fundamental profitability.

If you want to fix YOUR cash flow, I suggest the following to start:

  1. List all of the issues that you know are causing your problems
  2. Start fixing the biggest problem and the easiest problem to fix at the same time.
    - Fixing the easiest problem will give you momentum
    - Fixing the biggest problem will help you the most

    Here is the key issue: Are you fixing the underlying problems or just the symptoms?


    If you are just fixing symptoms, you will have the problem over and over again.

    Any thoughts?

    E-mail me your comments at [email protected]

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Emotions in Business

Sometimes cash flow issues are not about the cash. They are about the people involved in a business, the emotions, and the mindset.

"I am very appreciative of the time David was willing to spend with me. From the first contact, he was warm, welcoming, and sincere and that carried over to and throughout our initial consultation. David's advice and feedback were certainly helpful in regard to the nuts and bolts of my situation, but also, and possibly more importantly, in regard to my personal mindset and view of the challenges faced. 

I am impressed with David’s vision of how he can help small and large businesses alike become more efficient and effective. I am equally impressed by the way he is going about accomplishing that vision! I am happy to give my recommendation."

Cash flow and business challenges can be very emotional. It is never "just business."

Are you totally detached and unemotional about your business?

E-mail me your comments at [email protected]

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Step One: Mindset

What's the one thing that business owners never talk about when I ask them to tell me about their business?

Cash management.

I don’t blame them. They didn’t start their business to manage cash. They started their business to do something they really enjoy and get paid for it – like create websites, sell real estate, practice law, do collision repair, or any of a million things that people enjoy doing to make money.

When I start working with a business that has a cash crunch and may not survive, I first work with the business owner’s mindset.

I help them understand that while managing their cash isn’t what they want to do, it will keep their business alive so they can do what they love to do. It allows them to spend more time and energy on what they love, but only after their cash management systems are in place.

Check out my article about 5 Key Mindsets.

Want to talk about managing cash in your business?

Then tell me, what's your biggest cash management...

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Keep Your Business Alive

What's the one thing that business owners never talk about when I ask them to tell me about their business?

Cash management.

I don’t blame them. They didn’t start their business to manage cash. They started their business to do something they really enjoy and get paid for it – like create websites, sell real estate, practice law, do collision repair, or do any of a million things that people enjoy doing to make money.

When I start working with a business that has a cash crunch and may not survive, I first work with the business owner’s mindset.

I help them understand that while managing their cash isn’t what they want to do, it will keep their business alive so they can do what they love to do. It allows them to spend more time and energy on what they love, but only after their cash management systems are in place.

Want to talk about managing cash in your business? Then tell me, what's your biggest cash management challenge?

E-mail me your comments at...

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Profit with Sustainable Cash Flow

Profit does not mean that there is cash in the bank. A growing bank account does not mean that you are making a profit.

Surprised? You're not alone. Most schools, CPAs, news reports, etc. focus on a company’s earnings, profits, and sales. That’s because those same institutions are geared toward teaching, working for, and reporting for BIG big businesses and public companies.

But if you are a small business, your most important measurements for the next 3 months or so have to do with cash:
 

  • How much cash is coming into or going out of the company?
  • What is your cash balance projected to be?
  • Do you have cash or credit reserves to get you through cash shortfalls?

So don’t be fooled by “the establishment” into thinking “profit, profit, profit.”

Think: “Profit with sustainable cash flow!”

Let me know if “profit without cash” is a new concept to you, or if it’s not, how you learned about the concept!

E-mail me...

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Don't Borrow Money, Just Don't Pay Your Bills

No money to pay your bills? Don't borrow money, just don't pay your bills.

You have to pay them at some point, but there are tactics to slow down money flowing out of your bank account.

But FIRST... here are some bills you need to pay on time:
Payroll.
Payroll.
Payroll.
Anything that puts you in breach of contract and puts your business, your home, or your health at risk.

Other than that, most bills can be postponed past the due date without dire consequences.

Look at bills that you owe large corporations, who are used to delays. Telephone, internet, utilities, insurance companies. You may be able to wait up to 60 days without consequences. Let them know when you'll be paying.

Suppliers: Make sure that you talk with them. Make payment arrangements. Don't surprise them. Make a partial payment. Many times your relationship is more important than delaying payment.

Mortgages and rent: Most have a no-penalty grace period. Use it when you need to.

Please, be careful with solo-entrepreneurs and...

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Fortnight Cash Flow with David Safeer

 

On this episode of Fortnight Cash Flow, David talks with DryRun's Jeremy Burke discussing simple cash flow optimization techniques that you can implement in your own business. 

 

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Give Your Clients a Return on Their Investment

Are you a cost center or do you provide a documented return on investment (ROI) for your clients?

Most companies, non-profits, and government institutions view accounting, bookkeeping, tax preparation, and financial analysis as an expense that needs to be endured. Because of this, they often look for a low-cost provider that meets a minimum standard, like a certification.

Examples would be a QuickBooks Advisor, accounting degree, or CPA or Chartered Accountant.

There are literally millions that have certifications of each type.

What if you could show an ROI to clients?

Show them that for every dollar, pound, Euro, lira, or peso they spend they get to save or make 5x, 10x, 100x, or even 1,000x what they spent?

The best way to do that is through advisory services which help improve a company's financial performance.

If this interests you, register here for the on-demand webinar which explains this opportunity further. It could be a perfect fit for you and your practice.

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Chart of Accounts: The Financial Foundation of Your Business

Most business owners' eyes glaze over when I talk to them about the "chart of accounts."

Then we talk about what they are trying to understand about their business's finances. They generally want the same thing:

- How much money am I making?
- How do I know if I'll have enough money to pay the bills?
- Which products and services make the most money?
- Do I have extra expenses that I can cut?
- Do I have enough capital to grow?

When I explain that the chart of accounts is the foundation for understanding each of those questions, they get more interested.

I explain that the chart of accounts is a list of categories.

Then I tell the business owner:
• Where sales come from
• Where expenses go
• What the assets are (what's owned)
• What the liabilities are (what's owed to others)
• What the difference is between what's owned and what's owed. This is called the “equity” in a company.

They quickly understand that with the right chart of accounts they can...

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Cash Flow Management Automation Software

“Automation applied to an inefficient operation will magnify the inefficiency.” 

- Bill Gates

I am constantly asked, "What software do you use to implement cash flow management?"

My answer: "I start with an Excel model."

Usually, people are surprised and even disappointed. They want to believe that there is a "silver bullet" that magically picks up their accounting data and will automatically tell them how to improve their cash flow.

It just doesn't work that way.

Why? Because....

Most companies have a very inefficient operation when it comes to managing their cash flow.

Building out an Excel model becomes a conversation about how all the pieces of cash moving into and out of the company fall into place.

After you understand the movement then you can automate the model.

Do you use automation in your business? I'd love to know how, and if it took some time to make it efficient.

Let me know in the comments below!

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