Day: March 3, 2020

Cash Flow Management Tips to Improve Your Business

Cash flow management is simply a process of tracking the amount of money coming in and the amount of money going out. It helps you determine the amount of money that will be available to your business in the future. There is no business that can survive without proper cash flow management. It is an essential part of financial analysis and is an integral part of any business.

Cash flow management is especially important for startups. If the company is not able to manage its cash flow during the first year of operations, it will probably not survive during the second year. Poor management of cash flow can result in a company’s inability to pay its suppliers or finance urgent needs. Without any doubt, you can make use of a credit line.

However, when your loans and credit cards are empty, you will be left in a situation where the cash is needed.

In order to perform cash flow analysis, you will have to take three key elements into consideration and they are as follows:

  • Accounts receivable – This is the amount of money customers owe you.
  • Accounts payable – This is the amount of money you owe to suppliers.
  • Shortfalls – This refers to the situation where you owe more than what you have on liability.

You have to be able to manage all the aforementioned elements in order to lead your business to success. It is not advisable to allow a situation where your customers owe you too much or when you owe your suppliers too much. Otherwise, it can hurt your business significantly.

In order to determine the current cash flow, you will have to look at the amount of money coming in and the amount of money going out. In case you have a number of customers that owe you money and have yet to pay, make sure not to consider this as part of your cash flow.

Undoubtedly, cash flow management is vital for business. However, if there is no cash to be managed in the first place, the business is in trouble. There are, however, a number of ways to increase your cash flow and eliminate any difficulties with it.

Here are the most important cash flow management tips you can use for your business:

Calculate the break-even point.

cash flow management business tips

It is critically important to determine the break-even point for your business. In this way, you will know when your business becomes profitable and also gives an early goal to strive for.

During cash flow management, keep your focus on reaching that break-even point. This type of analysis can be done in two ways: unit-based or dollar-based. Both approaches involve fixed costs.

In order to calculate the BEP with the use of a unit-based approach, you will need to take your fixed cost. The next step would be taking your revenue per item and subtracting it from the variable cost per item.

The final step is to take the fixed cost and divide it by that number. BEP, with the use of a dollar-based approach, involves taking a fixed cost and dividing it by the contribution margin.

Consider cash flow before profits.

It might sound contradictory, but this is a reality. Even if you reach your break-even point and your business is profitable, you still need to take care of cash flow management.

The next step after reaching the BEP is making an analysis of accounts payable, accounts receivable, and shortfalls. Then, determine whether any of them possess a problem for your business.

It might also be the case that your business is able to break even but it does not have any cash left. If this is the case for you, then it is time to have a detailed look at the aforementioned elements.

It will help you to figure out whether you need to attract new customers or it would be wise to cut the expenses. Even the smallest modification can have a great impact on the profit margin and provide you with an idea of what impacts your business most.

Try to have cash reserves.

Any business has shortfalls and yours is not an exclusion. The survival of your business highly depends on the ability to manage these shortfalls. If you start your business already with some cash in your bank account, it will make your life much easier.

It would be great to have cash reserves that will help you to last for the first three to six months. In this way, you will be able to protect your business from situations where a market dives into a temporary downturn.

Focus on collecting receivables ASAP.

Customers like situations when the invoice says “due in 30 days”. Even though it is good for customers, it is not good for your business. It is recommended to state “due upon receipt” on your invoice.

You can also delegate the task of keeping an eye on receivables to your employees. He/she will be responsible for contacting your customers and collecting payments.

Extend payables ASAP.

Approach to account payables should be the opposite of account receivables. It is advised to extend payable to net 60 or net 90 if possible. It will give you a chance to have a higher cash balance and increase your debt.

Another reason for having cash reserves is your ability to pay suppliers. If you owe suppliers and do not have enough cash to make payments, you will harm the relationship with them. They might also impose additional fees. Apart from that, they can withhold the next shipment, which will interrupt the whole production process.

Carefully monitor your cash flow.

Make sure you have a professional team in the finance department. These people should be completely informed about all the company’s finances. It is also important to have a person who will be responsible for monitoring the cash flow and informing you when the company reaches a certain threshold. For example, when your cash flow hits the $1,000 mark.

Apply technology to your cash flow management.

cash flow management tip

Specialists recommend keeping your cash flow spreadsheets in the cloud. Some of these sites are DropBox and OneDrive.

By utilizing these services, you will be able to access them from anywhere. You can also make use of professional accounting software. One important detail to be mentioned is security.

Thus, when using cloud-based technology, make sure to have the best security practices in place in order to protect the data. Security should be priority number one for your business.

See Also: How Cloud Technology Can Help Your Business Grow

Project future cash flows.

Estimating future cash flows is an important element of cash flow management. This is normally done with the use of historical data and market movements. Make sure to make projections for every month, quarter, and year. Precise cash flow projections can alert you to problems before they appear.

Without any doubt, it is almost impossible to make the forecast that will match with real numbers when the time comes. However, it is possible to make a prediction that will be close to the real numbers.

Cash flow projections will give you an idea of what to expect in the future. In this way, you will be able to prepare your company for any difficulties that will come along the way.

The post Cash Flow Management Tips to Improve Your Business appeared first on Dumb Little Man.

New York’s Governor Cuomo requires insurers to waive cost sharing for COVID-19 tests

In a move that other states might want to emulate, New York State Governor Andrew M. Cuomo said that the state’s Department of Financial Services is requiring health insurers in the state to waive cost sharing associated with testing for the new coronavirus, COVID-19.

The initiative paves the way for low-cost emergency room, urgent care, and hospital visits for patients worried that they may have contracted the virus.

The Governor also said that New Yorkers receiving Medicaid coverage will not be expected to pay a co-pay for any testing related to the novel coronavirus, COVID-19. The steps are designed to ensure that residents of the state won’t have to worry about cost as an obstacle for getting tested. Any tests that are being conducted at the State’s Wadsworth Lab are fully covered.

Cuomo’s administration also outlined other actions health insurers are either going to be required or advised to take — including informing New Yorkers of available benefits, offering telehealth medical advice and treatment, and preparing insurers to cover the costs of COVID-19 immunizations if a vaccine becomes available.

“We have the best health-care system in the world, and we are leveraging that system including our state-of-the-art Wadsworth testing lab to help contain any potential spread of the novel coronavirus in New York,” Governor Cuomo said, in a statement. “Containing this virus depends on us having the facts about who has it – and these measures will break down any barriers that could prevent New Yorkers from getting tested.”

The state’s initiative will prevent insurers from forcing cost-sharing on in-network provider office visits or urgent care visits, when the purpose is a test for the novel COVID-19 coronavirus. The initiative is also designed to ensure that New Yorkers receiving Medicaid coverage have their costs covered.

Employees who are in self-funded employer-based plans not regulated b ERISA statutes need to contact employers to see how the new regulations will effect them.

The State is also requiring insurers to devote resources to inform consumers of available benefits; provide and promote telehealth services; encourage and verify whether provider networks are adequately prepared to handle potential increases in demand for services including offering access to out-of-network services; covering the costs of immunizations if they become available; expand access to prescription drugs; and ensure proper emergency care.

‘The 2020 campaign is a Mad Lib’: Stephen Colbert wraps up the Democratic candidates’ weird weekend

'The 2020 campaign is a Mad Lib': Stephen Colbert wraps up the Democratic candidates' weird weekend

Joe Biden won South Carolina’s Democratic primary over the weekend, prompting three of his fellow candidates to quietly take their presidential dreams out back to look at the rabbits. One of these candidates was Tom Steyer, who just the night before had been on stage at a rally, bopping up and down to ’90s hip-hop tune “Back That Azz Up.”

“A white billionaire dancing to Juvenile to a song about butts,” said Late Show host Stephen Colbert during Monday’s episode. “The 2020 campaign is officially a Mad Lib.”

Also dropping out were Pete Buttigieg and Amy Klobuchar. “Klobuchar made the decision to drop out when it became clear she wouldn’t win the nomination, but kept running for over a year anyway,” Colbert. Read more…

More about Joe Biden, South Carolina, Stephen Colbert, The Late Show With Stephen Colbert, and 2020 Election