Cash Flow: Your Bottom Line—Really

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I frequently I get the question, “What is a cash flow statement and how can that information help with the financial decisions of my business?”

I have to preface this with the facts. I started this blog prior to the COVID-19 shut down of our world as we know it. When researching and preparing the details of this newsletter, I knew the content was pertinent to a business owner. Little did I know, how vital it would be at the time of meeting the deadline to send to publishing. As I am reviewing this, a little more than two weeks will have passed before you are reading it. It is so important to stay on track, focus and get back to your foundation. Here is one way that can help you do that.

Your cash flow statement shows the flow of cash for your business during a set period of time. Cash flow consists of money received and money spent.

Using this in conjunction with your income statement and balance sheet, is a strategic way to verify that you’ve got enough to keep going, even when uncertainties occur.

For small businesses who run on tight margins, checking this regularly, at least monthly, is significant. Being up on these details, has helped many owners weather the times as we now know them to be. Stay proactive and informed. As an involved owner, you want to know if your everyday operations are generating enough money for you to basically stay in business. If you’re running low on cash, or just starting up, you might want to check it more frequently. This would be especially vital if for example, any major financial decisions are in the future, relocating, business loan, adding salaried positions, or other cash flow impacting actions. (Little did I know when I wrote that, what was to come.)

The best part about this statement is that it really does show your bottom line of the cash in hand. Meaning, it doesn’t include money that customers owe you but haven’t yet paid you. It also excludes money from loans that you receive. It’s an authentic picture of what you have on hand, your ‘net cash balance’.

Reviewing this report, will allow you to spot patterns that then help you predict potential downturns in your cash flow. Knowing these patterns will be extremely useful to help make those determinations for major financial purchases and decisions. You can also spot red flags, the most impactful being if the net income received is equal to or less than what you’re spending to operate your business. You can make some very successful decisions and take immediate action as needed, with this information at hand

But the most important thing about a cash flow statement is that, simply put, it lets you see your liquidity—if you have what you need to stay afloat.

The impact of this virus, will appear and be felt in ripples and waves over time. However, time forces us to continue to move forward, find growth, and to accept the ‘new normal’. When you get to that point, your cashflow will be one of your trusted resources, and you can’t imagine how you got along without utilizing it as much as you do now.

I do pray, there is some positive that comes out of this unsettling time in our life. While it may not be known today or tomorrow, we all need to focus on the good going on in the world, in your community, in your family and by you.

‘Look for the helpers. You will always find people who are helping’ Mister Rogers

 

 

Tammy Stifel
OrganizerForU
Bookkeeping | New Businesses | Quickbooks
p. 515.988.7532
e. tammy@organizerforu.com

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A little more about us:
We guide, assist and manage your bookkeeping operations, customizing our service to fit within your needs, budget and timeframe.

Services include:

Providing daily, weekly, monthly or occasional BOOKKEEPING SERVICES. We assist to the degree that meets your needs and your budget. We provide you with a clear picture of your finances.

  • Handling A/P and A/R entries, monthly financial reports, yearly audit assistance, state banking regulation audits, payroll processing, sales tax filing, and developing and implementing work-flow systems to ensure documentation requirements are accurate and complete.
  • Creating the foundation for a cost-effective accounting system for NEW BUSINESSES, and those working to get more established, then providing customized, agreed-upon bookkeeping services contracting with clients for a clear understanding of the services to be provided.
  • SCRUTINIZING existing financials to determine more timely, accurate and EFFICIENT bookkeeping options.
  • Training of bookkeeping personnel in QUICKBOOKS as a Certified ProAdvisor.
    Examining financials to provide DECISION-MAKING INFORMATION regarding financial department personnel needs, resources and timing for product and service expansion, financial strategies for real estate or asset purchases, etc.
    MANAGING your books in a way that allows YOU to do what YOU DO BEST, sell your product or provide your services, while staying as involved in the bookkeeping as needed for proper management of your financials.
    CONSULTING on-call for client financial questions.

OrganizerForU offers a 20- to 30-minute complementary phone consultation. We value your time and we know that time efficiency is cost effective. During our call, we listen as you describe the current financial situation of your business, asking the right questions to determine how our services can meet your needs. We take time to briefly explain how our services are provided, to ensure we are a good fit for your needs and situation.

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